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BT rival Cityfibre blames ‘struggling’ economy as it cuts 400 jobs

broadband
broadband

BT rival Cityfibre is to cut up to 400 jobs amid rising costs and growing competition between the UK’s high-speed broadband providers.

The telecoms firm, which is backed by Goldman Sachs, is reducing its 2,000-strong workforce by up to a fifth in a bid to cut costs.

The move comes as challenger broadband providers fight for survival in the race to roll out full-fibre internet connections across the country.

In a note to staff, seen by The Telegraph, chief executive Greg Mesch said: “The UK’s economy is struggling, and this is affecting both the market and our customers.

“While our rollout is fully financed, these pressures only increase the importance of taking responsible financial and operational decisions.

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“Realising a more efficient operating model requires us to act and structure ourselves differently. Sadly, this is likely to result in a reduction to our workforce.”

Cityfibre chief executive Greg Mesch - CityFibre
Cityfibre chief executive Greg Mesch - CityFibre

Mr Mesch added that the cuts were aimed at improving efficiency after a rapid period of growth.

A company insider said: “They [Cityfibre] are targeting operational breakeven by end of this year but are nowhere near it financially.”

The company, which is aiming to connect 8m homes by 2025, said it may hire up to 200 people alongside the job cuts.

Cityfibre and other so-called “alt-nets”, or alternative network providers, have complained to Ofcom that planned wholesale price cuts by BT’s Openreach put £20bn of investment in full-fibre at risk.

Openreach last month unveiled its new price plan – dubbed Equinox 2 – which will reduce the fees paid by providers such as TalkTalk and Sky. Rivals say the strategy will undercut them by locking customers into longer deals, something Openreach has denied.

Ofcom has launched a review into whether Equinox 2 raises competition concerns and is expected to publish its verdict in the coming days.

The UK has seen an explosion of alt-net providers competing to build full-fibre broadband networks under Boris Johnson’s £5bn Project Gigabit scheme.

Cityfibre raised £4.9bn in debt financing last summer and is among the largest alt nets in the market, alongside Hyperoptic, which is focused on connecting large apartment blocks.

Many smaller players have struggled to gain ground amid a faster-than-expected rollout by Openreach. Rising interest rates and higher costs are adding to pressure on the sector, fuelling fears of a wave of collapses.