CityFibre has agreed a £538 million takeover deal with two infrastructure investment firms, claiming the acquisition will allow it to establish itself as a genuine rival to BT Openreach.
The buyers are Private equity firm Antin Infrastructure Partners and Goldman-Sachs managed fund West Street Global Infrastructure Partners (WSIP) and CityFibre has recommended shareholders accept the offer as it will give the firm better access to funding for its ambitions.
“Under private ownership, CityFibre will be able to gain alternative and potentially easier access to the financing required for its announced FTTH deployment,” said Chris Stone, CityFibre Chairman.
“This will strengthen the Company's ability to deliver on its vision to provide full fibre infrastructure to 20 percent of the UK market."
CityFibre is one of several alternative network providers (altnets) which are deploying full fibre infrastructure across the UK. The vast majority of superfast broadband connections in the UK are powered by Openreach’s fibre to the cabinet (FTTC) technology, which uses copper for the final few hundred metres of the connection.
Openreach is pressing ahead with full fibre plans of its own, but the creation of a rival network would increase competition in the space, benefiting broadband providers and mobile networks who believe more fibre can improve backhaul and densify networks.
CityFibre doesn’t operate commercial broadband services and instead builds networks which it sells to other communications providers on a wholesale basis. It has built several city-based networks, and in 2015 bought KCOM’s infrastructure outside Hull and East Yorkshire. According to its full year results, CityFibre now has 3,740km of fibre infrastructure, up from 3,383km the year before.
Last year it agreed a deal with Vodafone to bring full fibre to at least one million premises by 2021, a figure which could increase to five million. The first locations have been named as Milton Keynes, Aberdeen and Peterborough and it has just been announced that Coventry, Edinburgh, Huddersfield and Stirling will be the next cities to be covered.
- Check out our list of the best fibre broadband deals for April!