Two of Britain’s biggest independent fibre broadband networks have been holding talks about a combination that would value the enlarged entity at several hundred million pounds.
Sky News has learnt that Zzoomm is in discussions with potential merger partners including Freedom Fibre, which is backed by the infrastructure investor Basalt.
Altnet industry sources said the talks had progressed to a detailed stage, although there was no certainty that an agreement would be reached.
One said that a merger could value the newly created company at around £500m.
Zzoomm, which is run by chief executive Matthew Hare, has been open about its desire to participate in industry consolidation.
“An enlarged group, based around our established operational and effectiveness and technical infrastructure, would benefit from the economies of scale,” he said in June.
The company is being advised by Acuity Advisors, a technology-focused firm.
News of the talks comes amid an acceleration in corporate activity in the altnets market, with dozens of smaller players facing growing financial pressures and a significantly tougher fundraising environment.
CityFibre Holdings, the largest independent challenger to BT Group’s Openreach, has already acquired a number of smaller competitors, while companies such as G Network are now regarded as being ‘in play’.
On Thursday, a spokesman for Zzoomm, which is backed by the US investment giant Oaktree Capital Management, confirmed that it was in negotiations with “numerous” parties but declined to comment specifically on Freedom Fibre.
A spokeswoman for Freedom Fibre did not respond to a request for comment.
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