Vulture fund forces London internet supplier into insolvency proceedings

London Broadband Provider Faces Administration Amid Financial Turmoil

A London-based broadband company has entered administration after being taken over by an investment fund known for acquiring struggling businesses, highlighting the mounting financial difficulties among smaller competitors to BT.

FitzWalter Capital, a firm specializing in purchasing and reselling distressed assets, has initiated the process to appoint administrators for G Network, a provider of high-speed internet services in London.

This move follows FitzWalter Capital’s recent acquisition of G Network from its previous stakeholders, the USS pension fund and Cube Infrastructure Managers, just one week prior.

Despite serving only 25,000 customers, G Network is believed to have accumulated debts totaling £300 million.

The fund now intends to sell G Network’s fibre broadband infrastructure and its customer contracts. Major lenders such as NatWest, Investec, and Santander are anticipated to incur losses on their investments.

About FitzWalter Capital

FitzWalter Capital was established by Ben Brazil, a former Macquarie investment banker renowned for his expertise in high-yield bonds. During his tenure, he was the third highest-paid executive at the bank, earning A$15 million (£7.5 million) in 2018.

Ben Brazil, founder of FitzWalter Capital, was among the top earners at his previous firm.

Industry-Wide Implications

Analysts suggest that G Network’s collapse, a company founded in 2016, could signal a broader trend of mergers and acquisitions among alternative broadband providers, often referred to as “alt-nets,” that compete with BT.

Numerous broadband startups have emerged to challenge BT’s market position, investing heavily in building advanced fibre networks. However, rising borrowing costs and lower-than-expected customer uptake have left many of these companies in precarious financial positions.

In 2024, the alt-net sector collectively reported losses of £1.5 billion, as increased revenues failed to compensate for substantial operational and interest expenses.

G Network’s Expansion Plans and Setbacks

G Network had previously announced ambitions to connect 1.4 million London homes by investing over £1 billion in its infrastructure. However, financial pressures forced the company to halt expansion, reaching only around 400,000 properties.

Eighteen months ago, the company enlisted Jefferies and Nomura to seek a buyer, but was unable to secure a deal at its desired valuation.

Community Fibre, another London-focused broadband provider, has frequently been mentioned as a potential acquirer and remains the leading candidate to purchase G Network’s assets. However, insiders note that any interest would depend on favorable terms and the ease of integrating the network.

Administration Process and Staff Impact

Legal documents reveal that G Network has engaged Taylor Wessing to handle the administration filing, with Alvarez & Marsal expected to oversee the insolvency proceedings.

According to sources close to the company, FitzWalter Capital’s swift decision to enter administration caught employees off guard, with staff being informed during an internal meeting the previous evening.

Following the takeover, the investment firm reportedly dismissed G Network’s senior management team.

Customer Uncertainty and Sector Concerns

It remains uncertain whether G Network’s customers will experience service disruptions as a result of the insolvency. The industry regulator, Ofcom, has been preparing contingency measures to maintain service continuity in the event of provider failures.

This development is likely to heighten worries about further bankruptcies within the alt-net sector, as many broadband challengers struggle under heavy debt burdens.

Karen Egan of Enders Analysis commented, “There are certainly a lot of alt-nets out there that are really struggling financially and hoping that they will be bought. G Network is a reminder that there won’t be a buyer for all of them.”

Both G Network and FitzWalter Capital were approached for comment.