£250m Raised to Fund Hyperoptic 1Gbps FTTP for 2 Million UK Premises

City focused full fibre ISP Hyperoptic has today completed a major debt raise of £250 million via eight international banks, which finally gives them enough investment to fund their proposed roll-out to cover 2 million UK premises with their 1Gbps capable FTTP / FTTB broadband network by the end of 2022.

Today’s news is on top of the £100m in private investment that they successfully raised last year from a consortium of four major European banks (BNP Paribas, ING, RBS and Dutch investment bank NIBC), which was itself also an addition to around £75m that had been raised in previous years.

The provider, which has already built a network that they say covers 500,000 premises (mostly homes) in multiple UK cities (expected to reach over 50 cities and towns by Q1 2019), last year set a new target of 2 million premises by 2022 and a future aspiration to reach 5 million by 2025 (here).

Hyperoptic is an urban focused provider and thus their normal approach involves connecting their Fibre-to-the-Premises / Building (FTTP/B) based network to large residential or office buildings in dense urban areas (e.g. Multi-Dwelling Units with at least 50 units), although they have recently expanded to do a few new build housing estates and lots of council (social) homes.

Crucially connecting up MDUs in the way that Hyperoptic does is significantly cheaper and quicker (per premises passed) than a traditional FTTP roll-out, which might require a lot more street works. As such a smaller investment, when used wisely, can go a long way.

Dana Tobak, CEO of Hyperoptic, said:

“Such large financial backing from prestigious investors is testament to the strength of Hyperoptic’s business model and proven track record for delivery. All our teams are forging ahead with one rally cry: Let’s Gigabit Britain.”

Suffice to say that as one of the longest running FTTP/B ISPs in the UK, Hyperoptic is now a serious rival to the major players in optical fibre (Openreach, Cityfibre etc.). Today’s news also means that their future network expansion will create another 1,500 jobs (doubling its current 600 staff across five offices) and 400 of those could be added by the end of this year, followed by 1,000 during 2019.

The ISP has been advised on the latest funding round by LionTree Advisors and the deal was co-led by BNP Paribas and ING, with a funding club of eight Tier 1 banks (i.e. Royal Bank of Scotland, Societe General, Royal Bank of Canada, HSH Nordbank, NIBC, and Barclays). The issue is said to have been “heavily oversubscribed, with all of the banks from the 2017 debt financing of £100m significantly increasing their commitment.”

Margot James MP, UK Digital Minister, said:

“We recently announced plans for a nationwide full fibre broadband network to build a Britain that’s fit for the future. Commercial investment will play a crucial part of this, and Hyperoptic’s commitment to deliver gigabit connectivity to more than 50 UK towns and cities shows that they match our ambitions.”

Joint-Statement by BNP Paribas and ING:

“We have continually been impressed with the quality, scope and pace of Hyperoptic’s network, and are proud to partner with the UK’s leader in delivering gigabit speed to every urban centre.”

Not that any of this will come as a huge surprise to anybody who has been following the core management team since their early days at BE Broadband (BE Unlimited), which was an excellent ISP until O2 gobbled it up (this was around when Dana and Boris moved to setup Hyperoptic in 2011). After that BE was sold on by a struggling Telefonica UK (O2) to effectively become Sky Broadband.

Meanwhile Hyperoptic, which last week welcomed the government’s Future Telecoms Infrastructure Review and its recommendations for reaching 100% FTTP coverage of the UK by 2033 (here), added that its own targets could be reached sooner if “more councils develop ’group’ planning agreements such as those it has already signed with Southwark, Thurrock, Brent, Hammersmith & Fulham, Southampton, and the City of London.”

The fact that their residential broadband packages are not merely incredibly fast, but also incredibly cheap, is another one of their key selling points. Prices tend to start at around £17 per month (special offer) for their 30Mbps service and rise to £45 (£60 after a discount) for 900Mbps with free installation, which is tough to beat.