CityFibre secures £1.1bn funding for full fibre rollout

Optical fiber
(Image credit: Pixabay)

CityFibre has raised £1.125 billion to bankroll its rollout of full fibre networks to more than eight million homes and businesses across the UK.

Mubadala, the Abu Dhabi sovereign wealth fund, and Interogo Holdings, a Swiss-based investment group that owns Ikea’s intellectual property, have paid a combined £825 million for a stake in the business, which has secured an additional £300 million banking facility.

The investors join Goldman Sachs and Antin Infrastructure Partners, which bought CityFibre for £538 million in 2018.

CityFibre investment

The company had been seeking investment for several months with CEO Greg Mesch suggesting earlier this year that as many as 20 firms were in the running. He says the financing is the “largest ever” to support a fibre deployment in the UK.

CityFibre doesn’t offer any direct-to-consumer products but instead delivers wholesale services to broadband providers, such as TalkTalk and Vodafone, and to mobile operators who require fibre backhaul for their mobile sites.

It is the UK’s third largest network infrastructure operator, after Openreach and Virgin Media O2, and is currently in the middle of a £4 billion programme that will see 8 million properties connected by 2025. 

This represents a third of the country and includes 800,000 businesses, 400,000 public sector sites and 250,000 5G access points.

Mesch had previously suggested CityFibre could increase its target if it secured additional capital.

“This new capital will not only underpin our rollout to up to 8m homes across 285 cities, towns and villages, but will also enable our participation in the Government’s ‘Project Gigabit’ programme to extend our future-proof infrastructure to rural areas and ensure no one is left behind,” he declared.

“This capital raise is proof of the benefits of a truly competitive infrastructure market, as envisaged by both Government and Ofcom. If nurtured and protected, infrastructure competition at scale will continue to unleash huge investment from the private sector as well as catalyse investment from incumbent operators. Ultimately though, it is residents, businesses and the UK economy that stand to benefit, with competition driving what has become the fastest rollout of Full Fibre in Europe.”

There has been a flood of investments in the sector by private equity firms in recent years because of the predictable, stable revenues promised by assets such as fibre networks and mobile masts. Meanwhile demand for ultrafast broadband and 5G means there is scope for growth.

This long-term view contrasts with the short-term pressures that network investment imposes on mobile operators who are in the middle of expensive network builds.

Steve McCaskill is TechRadar Pro's resident mobile industry expert, covering all aspects of the UK and global news, from operators to service providers and everything in between. He is a former editor of Silicon UK and journalist with over a decade's experience in the technology industry, writing about technology, in particular, telecoms, mobile and sports tech, sports, video games and media.