The UK’s altnet sector remains bullish about its growth prospects, with 83% of companies expecting to expand over the next 12 months, according to the newly published Altnet Confidence Index 2025.

The report – which surveyed 300 decision-makers across the UK market, including ISPs, network operators, and technology vendors – found that dspite warnings of market instability, sector leaders remain confident, with 23% of respondents anticipating significant growth.

Wholesale providers were notably optimistic, with over 90% predicting expansion, compared with just 65% of retail providers and ISPs, who face tougher competition and slower subscriber growth.

What are the top investment priorities?

One of the report’s standout findings is the sector’s prioritisation of sustainability.

Nearly 40% of respondents named sustainability as their top area for investment over the coming year, eclipsing traditional priorities like network expansion (25%) and emerging technologies such as AI or automation (12%). Marketing and customer acquisition lagged far behind at just 7%.

This investment focus reflects growing pressure across the telecoms supply chain to cut carbon emissions and adopt greener practices. However, the relatively low prioritisation of AI and automation stands in stark contrast to the wider telecoms sector, where major players such as BT and Nokia have announced multibillion-pound AI strategies.

The report found that confidence levels differ sharply depending on geography. While urban and suburban operators reported high growth expectations (81% and 83%, respectively), confidence dropped to 60% in rural areas. Rural operators face unique challenges, including higher build costs, skills shortages, limited infrastructure, and complex regulatory hurdles.

Consolidation is another key theme in the report, with 70% of respondents saying it has had a positive impact on their business. Mergers and acquisitions – including the high-profile 2024 merger of Netomnia and Brsk – have bolstered investor confidence and expanded network footprints.

Yet concerns linger over the long-term effects of consolidation on the market. Only 11% of respondents said it gave them confidence in the sector’s future, while 28% identified consolidation as the biggest threat overall. Decision-makers worry that fewer operators could stifle innovation, increase overbuild issues, and reduce regional expertise.

Technological Progress Driving Long-Term Confidence

While sustainability dominates near-term investment, technological advancement remains the sector’s strongest driver of long-term confidence.

Respondents cited innovations in fibre infrastructure, software, and convergence with other technologies – such as 5G, satellite, and Fixed Wireless Access (FWA) – as critical to altnets’ ability to challenge incumbents and deliver competitive services.

Interestingly, though, only 12% of companies are prioritising investment in AI or network automation, and just 9% plan to invest in next-generation hardware. This disconnect raises questions about whether altnets are relying on vendors and suppliers to deliver the innovations they expect to fuel growth.

Concerns Over Costs and Regulation

The report identifies three major pain points for altnets:

1. Rising operational costs – exacerbated by high interest rates and the copper network shutdown.

2. Regulatory pressures – particularly around Ofcom’s Telecoms Access Review, which some fear favours BT Openreach.

3. Customer churn – accelerated by the One Touch Switching process, which makes it easier for consumers to switch providers.

Wholesale providers are particularly concerned about attracting investment, while ISPs without their own networks face challenges around subscriber acquisition and limited capital backing.

Investment Trends and Market Outlook

Looking ahead, 77% of companies plan to increase investment in 2025, with 20% expecting significant increases. Aside from sustainability and network build, convergence with complementary technologies is viewed as the next big opportunity, cited by 31% of respondents as the key driver of success over the next five years.

Competitive pricing models that disrupt incumbent operators were the second-most important success factor (15.7%), while government policy and regulation were cited by just 12%. Mass subscriber adoption was viewed as a driver of success by only 4%, reflecting the sector’s current challenges with take-up rates.

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Speaking in the report’s foreword, James Page, CEO of Proactive International PR, said: “Overall, the sector certainly feels confident in its ability to grow and continue to challenge the incumbent operator by offering a viable and sustainable alternative for customers.

“It is hard to ignore the predictions that there is a bubble waiting to burst and it remains to beseen how damaging an impact the sector’s concerns, such as expenditures and regulatory pressures, will have.

“On the other hand, the success of the sector’s investment and its predictions will no doubt be measured over the coming year – as will whether its confidence is dented or emboldened in 12 months’ time.”