KCOM in Hull UK Reach Agreement to Restructure its Current Capital Structure

Telecoms network operator KCOM, which is the incumbent broadband provider for Hull and has also deployed their full fibre (FTTP) network across other parts of East Yorkshire and Lincolnshire (England), has revealed that they’ve reached an agreement with their lenders and shareholders to restructure their current capital structure.

Just to recap. Macquarie Infrastructure (MIRA / MEIF 6 Fibre), following a bidding war with the Universities Superannuation Scheme (USS), secured their £627m acquisition of KCOM in August 2019 (here). At the time KCOM had only just finished their £85m “Lightstream” roll-out of full fibre technology in the Hull area (here), but they’ve since expanded this and also been busy removing their legacy copper line services.

Regular readers might recall that Macquarie kicked off a Strategic Review of the business back in the Spring of 2024, which was reportedly to be conducted by PJT Partners (here). This was followed last month by reports that Macquarie had allegedly taken another step toward consolidation by appointing Perella Weinberg Partners to test the UK market for interest in a sale of KCOM’s business (here), possibly during Q2 2026.

One challenge to the consolidation approach is that KCOM’s control of its core market, particularly in Hull, has been significantly eroded in recent years by rival networks. According to Ofcom, recent fibre builds by rivals like MS3, Connexin (CityFibre) and Grain have given local customers more choice of broadband connectivity, with around 70-79% of premises in the Hull Area now having access to at least one alternative network to KCOM.

The regulator’s recent telecoms market review of the Hull area also looks set to maintain many of its controls on the incumbent and even foster greater infrastructure sharing (here), which certainly won’t do KCOM any favours in terms of a potential sale of the business. Ofcom are due to publish their final proposals on all this in October 2026.

KCOM’s restructuring

One of ISPreview’s sources recently spotted that KCOM had published a new Regulatory Financial Statement ahead of their imminent company results. But what’s interesting about this is that, buried deep within the document on page 20 and written in small print, is the mention of a new agreement between the operator and its lenders and shareholders.

The first two paragraphs are the most relevant, with the rest being somewhat more par for the course.

KCOM’s Capital Restructuring Agreement

During 2025, the KCOM Group commenced negotiations with its lenders and shareholders to restructure its current capital structure, in order that the Company’s capital structure is sustainable and allows the Company to continue as a best-in-class provider of connectivity services to its customers and to meet its obligations as they become due. An agreement has been reached in February 2026, to capitalise interest and reset covenants. The amended facility continues to mature in September 2027.

In parallel with the amended facility, the Company has entered into an agreement (the Agreement) with its lenders and shareholder. The Agreement may result in a sale, a sale of assets or a reorganisation. The Directors cannot reasonably assess the outcome of the Agreement, which is expected to conclude within the going concern assessment period.

Notwithstanding the outcomes under the Agreement, the directors have assessed cash flow forecasts for the period up to and including 31 March 2027, and full compliance with covenant requirements under the amended facility throughout going concern period is expected. Additionally, the Directors have sensitized the forecasts for the Group to reflect a plausible downside scenario and assessed the plausibility of a reverse stress test for significant changes in customer cease rates and prices charged to customers.

In both the base case and downside scenarios the forecasts show that the Group will have sufficient liquidity to enable it to meet its obligations as they fall due and will comply with all covenants up to and including 31 March 2027 and that implausible changes were required under the reverse stress test.

Under the Agreement all outcomes cannot be fully assessed at the date of the approval of these financial statements, and as such represent events or conditions which would indicate a material uncertainty that may cast significant doubt on the Group’s and parent company’s ability to continue as a going concern.

After making enquiries and taking into account the material uncertainty referred to above, the directors have a reasonable expectation that the Group and parent company has adequate resources to continue in operational existence for the foreseeable future. The Group and parent company therefore continues to adopt the going concern basis in preparing its regulated financial statements.

In short, KCOM was struggling with its existing debts (not uncommon in this market) and have attempted to resolve that, for now, by capitalising interest (i.e. shifting interest charges to debt/loans for payment later) and resetting covenants (i.e. lenders have probably relaxed the rules to be more flexible). Essentially, a temporary fix until September 2027, rather than a permeant one.

The above helps to explain last month’s reports of Macquarie looking to test the UK market for interest in a sale of KCOM’s business, since ideally, they’d want to find a proper solution this year, well before September 2027. The above statement clearly references an agreement that “may result in a sale, a sale of assets or a reorganisation” (i.e. all strategic options are now on the table).

In case any of this sounds familiar then that’s because the TalkTalk Group recently seems to have gone through a lot of the possible options that KCOM will now be considering (i.e. sale of the whole business, debt restructuring with lenders taking more control, or a break-up / asset sale of the business if a full sale doesn’t work out). ISPreview did ask KCOM about all this, but they declined to comment.