KKR Acquires Majority Stake in UK Full Fibre ISP Hyperoptic UPDATE

Urban “full fibre” (FTTP/B) broadband ISP Hyperoptic has today announced that the global investment firm KKR has completed the acquisition of a majority stake in the provider from funds managed by Newlight Partners LP and the Mubadala Investment Company. Sadly financial details of the agreement were not disclosed.

Curiously today’s announcement states that Hyperoptic’s network has so far reached “almost” 400,000 premises in parts of 43 UK cities and towns, which is oddly down from the “more than 500,000 homes and businesses passed” figure we were given over a year ago. We are seeking some clarification on this.

Otherwise the provider still intends to cover 2 million premises by the end of 2021, with a future aspiration to potentially reach 5 million by 2024. Today’s agreement is all about creating the right funding environment for that to be achieved. The ISP predominantly tends to cater for large apartment (MDU) and office blocks, which are quicker and easier to tackle but they have a lot of competition in this space (Community Fibre, Openreach (BT) etc.).

Last year the provider said they were also looking to harness Openreach’s existing cable ducts and poles via Physical Infrastructure Access (PIA), which could enable them to extend their service into “smaller blocks, housing and businesses” (here), although we’ve yet to see an update on this (it was due to commence this year in Greater London, Manchester, Glasgow, Edinburgh, Liverpool and Leeds).

Dana Tobak, Hyperoptic’s CEO, said:

“We are incredibly grateful to Newlight and Mubadala for their unwavering support and significant contributions to the success of Hyperoptic. Currently, only 8% of the UK has access to full fibre and less than half of that to symmetrical gigabit services.

We are confident that with the support of KKR and their significant expertise enabling high-growth businesses, our ambitious infrastructure plans to build our hyperfast network out to two million homes by 2021 and five million by 2024 will be realised.”

Cristina Gonzalez, Director in European Infrastructure at KKR, said:

“Hyperoptic has a market-leading position and superior consumer product. The business is strongly positioned to meet the growing demand for full-fibre services in the UK through further investment and national roll-out, supporting housing development and renovation. Our investment in Hyperoptic builds on KKR’s strong track record in telecommunications infrastructure in Europe, investing in and deploying next-generation digital connectivity.”

All of this follows last year’s £500m investment push (here), which among other sources included a major debt raise of £250 million via eight international banks and a significant equity raise via the investment arm of the Government of Abu Dhabi (Mubadala Investment Company).

Since then they’ve been busy preparing to ramp-up their rollout and have restructured the company management accordingly, although today’s announcement confirms that Hyperoptic will continue to be led by its existing Chief Executive Officer, Dana Tobak.

LionTree Advisors acted as the exclusive financial advisor to Hyperoptic and the selling shareholders in connection with the transaction. Last month it was reported that one of the provider’s original backers, George Soros (Quantum Strategic Partners), had hired LionTree to overseen a partial or full sale of his stake in the business.

UPDATE 1pm

Thanks to Carl for helping us to spot that Hyperoptic appear to be doing some PIA work around Tower Hamlets in London, where existing Openreach ducts are being cleared for their fibre (e.g. A13 East India Dock Road and Birchfield Street).

UPDATE 15th Oct 2019 (9:04am)

Hyperoptic informs us that the original 500,000 figure included buildings where they had wayleaves signed and where they were actively working to bring them online, while 400,000 is the number of homes and businesses that are live. Going forward they will only be using the live figure.