Altnet Zzoomm accelerates hunt for merger partners

A full-fibre broadband builder is accelerating its search for merger partners amid growing financial strains on some of the industry's smaller players.

Sky News understands that Zzoomm, which is backed by the giant US-based investor Oaktree Capital Management, has drafted in Acuity Advisors, a specialist technology firm, to identify prospective deals.

Zzoomm operates in nearly 30 market towns and small urban communities across the UK.

It said in June that it was "well-positioned to make acquisitions in fragmented and competitive markets as we are growing faster, have a more highly valued brand and network and stronger commercial proposition than many of our peers".

"An enlarged group, based around our established operational and effectiveness and technical infrastructure, would benefit from the economies of scale," Matthew Hare, Zzoomm chief executive, said.

One industry source said Zzoomm was engaged in discussions with a number of fellow altnets about a combination.

Analysts expect a frenzy of consolidation in the so-called altnet space as companies grapple with higher debt interest costs, with many of them having borrowed substantial sums to fund their rollouts.

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In recent weeks, Sky News has revealed that G Network, whose investors include Britain's university lecturers' pension scheme, is working with bankers to field takeover interest.

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CityFibre Holdings - the biggest challenger to BT's Openreach division - and Community Fibre are among the parties which have expressed interest in buying G Network.

Sources said Community Fibre had been rebuffed after tabling an offer worth about £300m.

Zzoomm declined to comment on the identity of its prospective merger targets.