Fibre optic broadband ISP Gigaclear has raised £111 million in new equity funding to help achieve the current target of making their 1Gbps capable Fibre-to-the-Premise (FTTP/H) network available to 150,000 premises in UK rural areas by around 2020 (mostly in England).
Last month the provider reported that their network was already available to 42,000 rural properties (with 10,000 active customers) around counties such as Berkshire, Buckinghamshire, Cambridgeshire, Essex, Hertfordshire, Gloucestershire, Kent, Leicestershire, Lincolnshire, Northamptonshire, Oxfordshire, Rutland and Worcestershire.
Many of the above deployments are recent developments that have stemmed from a growing number of significant state aid broadband contracts (recent examples here, here and here), which have been helping to grow the provider’s fibre optic network coverage at an increasingly rapid pace.
At the same time that the Government’s recent moves to support alternative “full fibre” network (altnet) providers with £600m of public funding (details) has helped to give investors’ confidence in the market, which has also been supported by Ofcom’s move to make Openreach’s (BT) national network more accessible to rivals (here).
All of this has in turn resulted in existing investors – Infracapital (£60m) and Woodford Investment Management (£15m) – joining with new investor Railpen (£35m), a railways pension scheme, and smaller investors (£1m) to raise £111 million.
This should help Gigaclear to meet their current contract obligations and to secure future contracts in other parts of the UK by focusing on the bits that BT struggles to upgrade.
Matthew Hare, CEO of Gigaclear, said:
“Full fibre is the future. This latest round of investment will enable Gigaclear to step up our speed of network delivery and is a clear signal of the confidence investors have in our continued expansion and success.
Millions of rural homes and businesses across the country need better broadband and we want to reach as many of those in rural areas as quickly as possible. Our pure fibre network transforms lives by providing access to the fastest internet speeds to be found anywhere in the world and technologically future-proofing these rural communities for years to come.”
Paul Bishop, Railpen’s Investment Director, said:
“As a long-term investor, we see the partnership with Gigaclear as a natural fit that will allow us to generate strong returns over time and fulfil our mission to pay members’ pensions securely, affordably and sustainably. We are also delighted that the company will be supporting local communities by bringing the benefits of best-in-class fibre-optic broadband to homes and businesses in new parts of the country.”
All of this is on top of the many tens of millions that Gigaclear has previously raised to help fund their deployment, such as last year’s loan of €25m (euros) from the European Investment Bank (EIB) and various private equity funding rounds worth around £50m. Back in 2014 the ISP envisaged that they could cover 200,000 rural properties with capital of £180 million and this appears to be holding true.
In case anybody missed it, Gigaclear’s latest accounts to December 2016 can be found online and this shows that their group revenue for the year was £3.5m (up from £1.4m in 2015) with net assets of £50.1m (up from £36.3m), although they made an operating loss of £10.8m (worse than 2015’s £6m); this is to be expected while the ISP remains in a heavy spend and build strategy.
The results also revealed that a “typical” Gigacler subscriber on their 1Gbps broadband package will use 2058GB (GigaBytes) of data per month, which is well above Ofcom’s average of 169GB for “superfast broadband” (30Mbps+) users.
UPDATE 12:07pm
Despite focusing on very different sides of the “full fibre” market, Cityfibre has weighed in on today’s news to welcome the development.
Greg Mesch, CEO at CityFibre, said:
“We congratulate Gigaclear on their success. This is not only welcome news for the rural communities stranded on unsuitable copper infrastructure, it also serves to highlight the crucial role and growing momentum of competitive full fibre players and the rapidly increasing market support for full fibre investment.
Alternative network providers like Gigaclear and CityFibre are playing a central role in transforming the UK’s digital infrastructure. This will ultimately contribute towards safeguarding the nation’s future as an economic force in a digital world.”
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