UK ISP Gigaclear Win Huge £30m Rural Fibre Optic Broadband Funding Boost

Internet provider Gigaclear, which specialises in deploying ultrafast 1000Mbps (Megabits per second) capable fibre optic broadband (FTTP) networks into some of the most economically challenging rural parts of the United Kingdom, have secured another £30 million from investors to help dramatically increase their network coverage.

The ISP, which just a few short years ago came out of almost nowhere after gobbling Rutland Telecom and now has a network that spans thousands of predominantly rural homes and businesses in several counties (e.g. Northamptonshire, North Yorkshire, Peterborough, Kent, Rutland, Oxfordshire), holds a bold aspiration to hit 50,000 premises passed by the end of 2015 and their “medium-term” plan is contemplating 200,000 (based on a total potential capital of £180m).

But to achieve such a goal the strictly demand driven operator needs money, not least because pure fibre optic networks are notoriously expensive to deploy. Last year the ISP raised £2.75m via an Enterprise Investment Scheme (EIS) and another £5m came from Neil Woodford’s new CF Woodford Equity Income Fund (Gigaclears first institutional investor). Shortly after that the provider also announced its intention to float onto the AIM market of the London Stock Exchange (here).

A second boost was given at the start of this year when Gigaclear announced the successful raising of another £6.5 million, which came from both their existing and new institutional and private shareholders (e.g. £2.5m from Forward Private Equity).

The good news is that Gigaclear has now secured a further £30m in new equity, with £20m coming from Prudential’s infrastructure investment arm (Infracapital) and the remaining £10m via existing shareholder Woodford Investment Management.

Matthew Hare, CEO of Gigaclear, said:

“Securing this new investment from Prudential and Woodford is a major breakthrough for Gigaclear. The divide between cut-off rural communities and connected towns and cities has never been greater, and we see Prudential and Woodford’s investments as a strong endorsement of our business plan to become the largest rural fibre-to-the-premises provider in the UK, bridging that divide by building ultrafast, pure fibre networks. These investments give us the resources needed to accelerate our roll out over the next 24 months to many more communities.”

Ed Clarke, Co-Founder and Director of Infracapital, said:

“We are delighted to play a role in getting the UK connected. This is a unique opportunity to invest at an early stage in the development of high speed communications infrastructure for the UK’s underserved rural population. Gigaclear has enormous growth potential and we look forward to supporting Gigaclear’s management team in the build out of fast, high quality broadband connectivity.”

Back in February 2015 it was noted how Gigaclear owned and operated 17 rural fibre networks, with 20 more under construction. Today the ISP operates 23 such networks and has a strong pipeline with a further 31 under construction, not to mention the many hundreds of rural communities that have asked for their help.

Predominantly, most of the areas where Gigaclear invests tend to reflect locations that exist outside of the national Broadband Delivery UK deployment with BT, although there have been some occasional moments of conflict (e.g. here and here).

But for the most part the ISP appears to have found a so far fairly successful commercial niche by focusing on a market of 1.5 million UK households and businesses in challenging rural locations.