Zzoomm and FullFibre to merge, more M&A to followZzoomm and FullFibre to merge, more M&A to follow

More than that, the companies have indicated that as a result of their tie-up they will be better placed to participate in more M&A activity in the UK in future. And it sounds like we're talking sooner rather than later.

The fibre providers – FullFibre is a wholesaler but also includes retail business BeFibre, while Zzoomm is a fibre builder and service provider – did not disclose the financial terms of their deal. They said they expect the deal close early this year, pending final documentation and regulatory approval; clearly they don't expect to have much trouble with the latter, given the short timeframe.

Ofcom is currently consulting on its upcoming Telecoms Access Review and has already intimated that it will likely be pro-M&A in the fibre space. Therefore, it is probably safe to assume that it will not have a huge problem with this merger, particularly given the scale of the players involved.

When Sky News reported that the pair were in talks last year it put a value of "several hundred million pounds" on the merged entity, just to give some idea of the potential magnitude of this deal.

Zzoomm and FullFibre said that together they will operate infrastructure that passes 600,000 premises, and a customer base of 65,000-plus, giving the combined entity "one of the largest full fibre footprints" in the market.

Technically, that may well be the case, given that many fibre altnets in the UK have very small coverage areas. But the gap between even a merged Zzoomm/FullFibre and the UK's largest fibre players remains sizeable.

BT's Openreach unit reported having FTTP network coverage of 17 million premises at the end of last year, or half of all UK homes and businesses, and aims to reach 30 million by the end of the decade. CityFibre has around 4 million premises covered by its fibre network, while Nexfibre recently reached the 2 million mark and is shooting for 5 million by 2026.

It's a challenging market for smaller players, particularly given the current economic situation, which is why there has been so much talk of altnet consolidation of late...and some action. CityFibre has bought up a number of rivals including most recently Lit fibre; Nexfibre and sister company Virgin Media O2 picked up Uppp; and last summer smaller players Netomnia and Brsk came together. Together Netomnia and Brsk can claim a fibre network footprint of 1.5 ready for service (RFS) premises, and aim to reach 3 million by the end of this year, just to give a little added context to Zzoomm and FullFibre's claims.

The consolidation we have seen to date could well be just the tip of the iceberg. Speaking to Sky News last year Zzoomm admitted to holding talks with numerous parties, although of course it did not elaborate, and there is no reason believe it simply narrowed down its options to FullFibre.

"We have consistently stated our strategy is to grow organically and by M&A in this fragmented market," said Zzoomm CEO Matthew Hare, who will serve as executive chairman of the merged outfit, while the role of group CEO will go to James Warner, currently FullFibre's chief executive.

"An enlarged business with the operational and financial infrastructure, benefiting from the economies of scale, as well as a management team with an exceptional track record, we will have an excellent platform to combine with other Altnets in the near future as well as driving organic growth faster," Hare said.

It sounds like another M&A announcement is imminent.