![An openreach van with the words Superfast fibre](https://media.guim.co.uk/17b3d06eb18970d3beb05c8a8da3a67a8f103098/0_355_3500_2100/1000.jpg)
Nearly £1bn was wiped off the market value of BT on Tuesday after Sky revealed that it would start using a rival’s cables to deliver broadband internet to British homes.
Sky said on Tuesday that it would offer broadband via CityFibre’s fibre optic network, in a move that could put pressure on BT’s Openreach business.
Sky is a customer of Openreach, but the emergence of rivals could allow it and other retail internet providers to negotiate lower connection fees.
BT’s share price fell by more than 6% on Tuesday, undoing most of the gains since the announcement last week that the Indian conglomerate Bharti Enterprises had bought a 24.5% stake in the company. The price fell to 136p, down from 145p on Monday evening, leaving the company’s market value at £13.5bn.
The addition of a second network by Sky had long been a concern for BT investors, according to analysts at Citi, an investment bank.
Openreach counted 4.7 million customers on 31 March 2024 who have the full-fibre connections necessary for the fastest internet speeds. There are 14m homes in its catchment area who could choose to buy full-fibre internet, with building started on connections to cover another 6m. There are 28m UK households.
BT hopes its scale will give it a cost advantage. Its main rival is Virgin Media O2, which is aiming to cover 5m households by 2026. The two companies are the dominant players who sell connections on to retail internet providers, who then market to consumers and businesses.
However, those two companies are increasingly coming under pressure from alternative networks, or “altnets”, who are racing to connect homes to full fibre and win market share.
CityFibre covers 3.8m households, and has plans to expand to 8m in the next few years. Other rivals include Community Fibre at 1.5m premises, nexfibre’s XGS-PON (which has an exclusive deal with Virgin Media O2) at 1.1m premises, and Gigaclear at 500,000 premises, according to the industry website Think Broadband.
Greg Mesch, CityFibre’s chief executive, said: “This partnership with Sky is a huge vote of confidence in our business and has cemented CityFibre’s position as the UK’s third digital infrastructure platform.”
Mark Chapman, a telecoms analyst at Creditsights, a bond rating agency, wrote in a note to clients last month: “Openreach’s position in a fibre world remains challenged by altnets.”
However, Danni Hewson, head of financial analysis at AJ Bell, an investment platform, said: “CityFibre’s modest scale and focus on rural areas suggest it shouldn’t be a huge issue.”