BT challenger Zzoomm is laying off hundreds of engineers as smaller broadband firms grapple with a funding crisis.
The Oxfordshire-based company, which is rolling out full-fibre internet connections across the UK, will start outsourcing its network build in a bid to conserve cash.
Around 300 employees in its construction team, including engineers and office roles, will be made redundant – equivalent to more than 50pc of the company’s workforce.
Bosses have begun a 45-day consultation process, but staff are being informed in one-on-one meetings whether or not they are being kept on.
Zzoomm, which is majority owned by US asset manager Oaktree Capital Management, was launched in 2019 with a focus on market towns such as Henley-on-Thames.
It was set up by Matthew Hare, founder and former chief executive of rural full-fibre network Gigaclear.
Zzoomm currently has around 11,000 customers and its network has reached 135,000 properties, with a take-up rate of around 7pc. It is aiming to reach one million properties by 2025.
In 2021, it secured £100m from a consortium of banks led by ING to help accelerate its build.
But the cutbacks come amid wider troubles for so-called “alt net” broadband providers, which are grappling with soaring borrowing and build costs as well as tough competition from incumbent BT.
The funding squeeze is expected to spark a wave of consolidation across the industry.
Earlier this year Zzoomm was linked to a possible bid for struggling broadband firm Trooli, which was ultimately snapped up by French infrastructure firm Vauban in a reported £100m deal.
Last month The Telegraph revealed that Virgin Media O2 has held talks with Cityfibre over a takeover deal that could be worth up to £3bn.
Philip Carse, of analyst Megabuyte, said the alt nets are facing a “semi-funding crisis”.
He said: “The climate has really changed significantly over the last nine months following all the kerfuffles last autumn plus interest rates rising. What that has meant is that what was an almost never-ending supply of capital into the alt-nets is becoming a lot harder to find.
“If that funding is a bit more expensive or a bit tougher to find, then basically you’re going to conserve cash.”
A spokesman for Zzoomm said the company expects to see faster growth this year than in 2022, adding that it is actively recruiting for some roles and is considering acquisitions as part of its growth strategy. The Telegraph