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Cityfibre Get £2.5bn to Build FTTH Broadband to 5 Million UK Homes

Wednesday, Oct 24th, 2018 (7:46 am) - Score 14,879

They’ve done it. Fibre optic network builder Cityfibre has announced that their backers have agreed to establish a £2.5bn fund, which will help the operator extend their 1Gbps capable Fibre-to-the-Home (FTTH/P) broadband ISP network to cover 5 million premises in 37 UK cities and towns by 2025.

At present the operator already has a Dark Fibre style network in around 50 cities and towns, which primarily serve public sector sites and businesses. On top of that they’re also investing £500m to build a new open-access FTTH network, which alongside Vodafone is working to cover a “minimum” of 1 million homes in up to 12 of their existing cities and towns (this Phase One should be “largely complete” by 2021).

After Phase One they had also previously spoken about the “potential to extend” this network up to 5 million homes (representing 20% of the current UK broadband market) by 2025, although that would require significantly more funding.

Since then Cityfibre has been acquired for £537.8m cash by Bidco and will be going private (here). The Bidco group was backed by Antin Infrastructure Partners and West Street Infrastructure Partners, which is a fund managed by Goldman Sachs.

The big news this morning is that Cityfibre’s new backers have agreed to establish a new £2.5bn investment programme for the operator, which they say will be enough to help them deliver on their 5 million aspiration and we’d agree. This, they suggest, could also deliver £85bn in associated economic benefits, but we take such estimates with a big pinch of salt due to the difficulty of quantifying such things.

Greg Mesch, CEO of CityFibre, said:

“With a head-start in 37 towns and cities, this full fibre investment plan enables us to further accelerate our rollout, catalysing huge economic growth in regional towns and cities across the country and transforming the UK’s digital future.

Our rollout will soon bring to scale an innovative wholesale network, providing internet service providers and mobile network operators with greater choice and unrivalled technical capabilities, benefitting all sectors of the market.

We now need to work together across Government, Ofcom and industry to create a level-playing field that continues to encourage investment from multiple network operators, so that full fibre can be delivered as quickly and effectively as possible.”

Jeremy Wright, UK Secretary of State for Digital (DCMS), said:

“The Future Telecoms Infrastructure Review set out our plans to maximise full fibre coverage. I’m delighted that CityFibre’s investment in 37 towns and cities across the UK will ensure the vast majority of homes and businesses in those areas can access this technology through new fibre networks.

Significant investment from new network operators is critical to deliver our ambition for nationwide coverage. Through our Industrial Strategy we’re working with businesses and Ofcom to ensure effective network competition that supports investment on this scale.”

The new funding pot will reflect a combination of debt and equity (we’re expecting an announcement on the new debt facility shortly). Meanwhile Cityfibre said they have already identified 37 UK towns and cities where it has critical fibre spine assets, which are now “primed for expansion” via FTTH (listed below).

Today’s news is significant as it represents the operator’s ascent toward becoming a truly major challenger versus the established likes of Openreach (BT) and Virgin Media. But it won’t be an easy process as Openreach are similarly aspiring to reach 10 million premises with FTTP by around 2025 and they’re doing many of the same cities (e.g. the big clash in Coventry – here and here). Competition is going to become aggressive.

On the other hand Openreach’s top speeds are much more expensive than the Cityfibre based Gigafast Broadband from Vodafone, which suggests that they’ll have to adapt or risk losing market share. At present their 500Mbps and 1000Mbps tiers are aimed more at small businesses and that may eventually have to change. Consumers in this market are very price conscious, but offering FTTP on the cheap can harm the investment case.

Meanwhile Virgin Media is only planning to do 2 million via FTTP and we have doubts about whether they’ll achieve that figure, although their existing EuroDOCSIS based Hybrid Fibre Coax cable network will be able to deliver Gigabit download speeds via the forthcoming DOCSIS 3.1 upgrade (covering around 60% of the UK at completion). But at present their big weakness is still upstream speed and flaky router quality.

The other big challenge in all this will be actually building the new network and finding enough civil engineers (Cityfibre said they’ll need to find another 5,000 engineers), which is already a difficulty in the UK with many operators currently wanting to do more FTTP and thus chasing a limited supply of skilled manpower. Scaling up, as Gigaclear recently found (here and here), is very hard to do.

Meanwhile spare a thought for all those forthcoming complaints about street work quality, which invariably seem to follow all of the major civil engineering linked deployments. Particularly in areas where residents may see their streets being ripped up several times over by different operators.

Current 10 Phase One Areas by Order of Announcement
Milton Keynes (£40m)
Aberdeen (£40m)
Peterborough (£30m)
Edinburgh (£100m)
Coventry (£60m)
Huddersfield (£30m)
Stirling (£10m)
Cambridge (£20m) – c.60,000 premises
Leeds (£120m)
Southend-on-Sea (£35m) – c.100,000 premises

The 27 Future Areas Under £2.5bn Plan
Bournemouth (£35m) – already has a legacy FTTH network to c.20k premises from Cityfibre
Northampton (£40m)

UPDATE 2:17pm

We have had a comment from UK ISP Zen Internet, which offers some useful thoughts on the appeal of Cityfibre’s network to providers like them at the wholesale level (Zen are currently Openreach-based).

Richard Tang, Founder & Chairman of Zen, said:

“The CityFibre investment should overall be good for UK households as it should provide increased competition to Openreach. Remembering the rise of the cable TV companies in the 90’s however, I hope they don’t make such a mess of all the footpaths!

One thing to note is that deploying the infrastructure is, in my view, the smaller part of the problem of providing viable competition to Openreach. The bigger part of the problem is layering a service on top of that infrastructure – something that Openreach has already achieved and refined.

CityFibre will have their work cut out to deploy the network and develop all the service layers within their stated timescales. Unless they get both aspects right, the competitive threat to Openreach will be very limited. I wish them best of luck.”

UPDATE 21st March 2019

Added the investment levels for Bournemouth and Northampton.

By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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46 Responses
  1. Avatar photo Tom West says:

    Fantastic news! It’s great to see a commitment to bring the Bournemouth network to the party (I used to live there and wondered when this was going to happen). Can we expect Openreach to announce some ‘fibre first’ plans in the same list of places now? Seems to have become a bit of a trend lately! 😉 While I can’t blame them for this (from a pure competition defence standpoint), whenever I see them ‘follow’ Cityfibre’s announcements, I do question how all the “X million premises” quoted from the different network builders can ever add up to full fibre coverage of the UK by 2033. Feels like some better intervention is in order? With all the other costly challenges faced by our country, we should be encouraging and perhaps even actively protecting all commitment to private investment in our communications infrastructure.

    1. Avatar photo Simon says:

      Lately? There have been “special” places since the word go – these places MUST be getting full now – Hopefully they will expand to places not on the list.

    2. Avatar photo Meadmodj says:

      Ofcom have so far not implemented any proposals to avoid FTTP overbuild or ensure common obligations. Ideally the cumulative investment of all the providers would get us closer to the 100% FTTP sooner if they do not cover the same ground. The problem is they are all being driven by different dependancies. Cityfibre start with pretty much of a clean sheet but OR and VM legacy network investment, recent, existing and deteriorating assets etc.
      The consumer issue going forward is being locked (service and price) to a particular network provider and ISP combination. OR may be commercially forced to withdraw from certain areas (Cityfibre, VM and Gigaclear) meaning there is no competition and raising concern that uneconomical premises will be left out and effectively stranded by the network providers as currently they do not have or proposed to have any obligations to supply.

    3. Avatar photo Butch Dingle says:

      “Cityfibre start with pretty much of a clean sheet”

      Really? Have you not heard of Cityfibre’s existing dark fibre network? (exists in the additional 27 towns/cities named)

    4. Avatar photo Meadmodj says:

      @Butch Dingle. Not talking backend I am referring to local distribution network. Yes early Cityfibre locations will utilise their existing spine. As will any provider.

    5. Avatar photo Carl says:

      “Ofcom have so far not implemented any proposals to avoid FTTP overbuild”

      Why should they? If it is the companies own investment then Cityfibre or anyone else should be allowed to build where they please, not dissimilar to Openreach which used their own money to overbuild in areas which had Virgin services already with FTTC.

    6. Avatar photo Meadmodj says:

      @Carl. I am not saying they should, simply that they might. I personally hope Ofcom stay out of it.

    7. Avatar photo Carl says:

      I am glad we are on the same page.

      If Ofcom were to meddle on were private companies put their private investment it would cause uproar in the industry and lead to nothing more than even less rollout. No organisation is going to bother at all if they can not even decide where they want to spend their own money.

      If Ofcom want to meddle even further then it should be with regards to making sure any public investment is divided more evenly among the now growing amount of suppliers which want to deliver product.

    8. Avatar photo shimshamman says:

      “If Ofcom were to meddle on were private companies put their private investment it would cause uproar in the industry and lead to nothing more than even less rollout.”

      And yet there has been no uproar in the meddling of BT.

    9. Avatar photo Carl says:

      There has been no meddling in where BT deploy their products they are free to pick and choose when it is their own investment. The same as any provider.

  2. Avatar photo Meadmodj says:

    What exactly does “create a level-playing field” mean to Cityfibre. In the urban areas they surely now have one. Some of their spines have attracted LFFN funding, they now have confidence of the required funding, scaled installations and they can use some BT ducts as long as they contribute to its repair/liabilities. But what shouldn’t happen is any enforced premature closure or manipulation of either OR DSL and VM VIVID networks. FTTP should justify itself on its own merits and normal market competition should apply in the urban space. Cityfibre will need to ramp up to 20k FTTP per week (same as OR) more if overbuild is now likely to occur.
    No doubt Cityfibre will moan but I don’t see why they particularly should be given a helping hand. You don’t see them proposing rural areas and I actually see the opposite. Ofcom will need to protect consumers by ensuring openness of their network to a broader church of ISPs and apply similar regulatory controls made on OR as FTTP monopolies may now be created. It is no longer simply a national SMP to be considered.

    1. Avatar photo A_Builder says:


      You make a very valid point where there are quite a number of players now with potentially big market shares funded and round the corner. Subject to finding enough techs to hook the thing up that is.

      There is going to have to a mandated open to wholesale factored in if more than a certain % of population is covered. At the moment I suspect OFCOM will sit back and see if common sense prevails. At the end of the day the networks will want max ROI and so wholesale will help get that. If people are stubborn then as VM currently are on that then there will have to be intervention in the market – on the other hand nobody really wants to wholesale the mess that is VM’s old hybrid network but they might be more interested in the newer FTTP bit and I think VM could justify the distinction on grounds of complexity.

      Being FTTP this won’t be as difficult as it was for FTTC and other hybrid technologies.

    2. Avatar photo Matthew says:

      But we all know that Virgin is if they are going stay relevant going need a big upgrade path starting soon. DCOIS 3.1 is obviously on the cards for them but there network is going need a overhaul expect fibre taken closer to end connection. Specially if they are wanting do Full Duplex 3.1 like Comcast is looking at doing.

    3. Avatar photo A_Builder says:


      If you look round SW6 VM are replacing all of the old one bay passive cabs with three bay active cabs. And also replacing all of the old two/three bay cabs with new ones.

      It is obvious as they all have the danger 220V on the RHS door of the cab.

      So if was to take a running guess I would say they are preparing for a DOCIS3.1 trial in that area.

      By the looks of things they also have some FTTP cabs serving some of the new blocks going in.

      Hyperoptic are also very active in that area on the larger buildings. So interesting times over there connectivity wise.

    4. Avatar photo CarlT says:

      The 3.1 trial is quite a long way from SW6.

      The existing cabinets aren’t passive. Think I’ve an idea what they’re up to. Most cabinets won’t be mains powered though much as they aren’t now. Powered over a coax feed from centralised power cabinets. Might need more of those, though, for the newer technology.

      FTTP just for new developments a strange choice. The VHubs they use for FTTP are good for 3000 premises however if the new cabinets are what I think they are they can handle pumping out FTTP.

      I would recommend a look into R-PHY R-MAC and R-CCAP.

    5. Avatar photo A_Builder says:


      “FTTP just for new developments a strange choice. The VHubs they use for FTTP are good for 3000 premises however if the new cabinets are what I think they are they can handle pumping out FTTP.’

      By FTTP I mean fibre to FROG

      I would have though it strange to see anyone putting coax in the road as fibre would be cheaper and faster to deploy as well as more durable and future proof.

      All of the cabs they are putting in have a danger 220V sticker on them. So they are main powered.

      I appreciate that some of the older VM stuff did have floating (phantom power) DC power over coax. Not all and some of the splitter boxes are and were purely passive.

      Let’s be positive VM are investing in updating at least a bit their network and seem to be doing a thorough job of it for once rather than patch and mend.

    6. Avatar photo CarlT says:


      ‘I appreciate that some of the older VM stuff did have floating (phantom power) DC power over coax. Not all and some of the splitter boxes are and were purely passive.’

      No. The standard HFC build is a centralised power feed from the mains then DC power over coax. Worldwide. This is what VM have been installing as part of the new builds they’ve been building over the past years. It’s not some new thing. This is why cable networks don’t use the spectrum below 5 MHz, that’s where the interference from the power feed is at its worst. You can actually see the distortion on a spectrum analyser.

      There are virtually no passive splitter boxes. I have never seen one, every cabinet I’ve seen feeding customers has a line extender amplifier in it.

      Anyway, on-topic it looks as though VM have had a lease or two come to expire on hubsites, so they are having to make some changes.

      Normally the CMTS, cable equivalent of a DSLAM, and the TV kit have 10GE links into switches then are sent to Edge QAMs which convert this into the RF carriers that are then sent along the fibre. Looks as though they are having to move CMTS elsewhere, so they are having to use 10GE Ethernet links into cabinets and have the RF generated there. This is Remote CCAP and means less equipment required at the adopted hubsite, where there may be challenges with regards to space, power and HVAC.

      The existing cabinets don’t have mains power for the most part and R-CCAP kit is built to run off of DC so I imagine the existing power cabinets can’t deliver the required wattage to the R-CCAP kit and they’ve had to introduce more mains powered cabinets to inject power onto the network and, of course, UPS in those cabinets to protect the TV services. That or they have upgraded the power cabinets.

      They might have some switches or other kit that expects a 220v feed in the R-CCAP cabinets so there might be inverters in there.

      Cabinets taking in a mains feed have a small window on the side for the electricity meter.

    7. Avatar photo CarlT says:

      I’ve had a look at the roadworks for the next 2 weeks and can’t find any evidence of major works being done by VM in SW6.

      Cityfibre are a busy bunch, VM are mostly installing new customers and unblocking ducts. I am not sure if doing a re-shell of a cabinet would require roadworks permissions. There has been some new build but going by the rest of the country unless the MDUs are part of wider new build they’ll be getting HFC per normal infill.

      If you could provide a more specific address where this work has taken place that’d be handy. It would’ve required two separate items of work – one to replace the cabinet with a larger one, so pouring of new concrete for cabinet base, etc, and another for a new mains connection.

      Be good to see what these ‘three bay’ cabinets that are going in are, too, whatever you’re meaning by ‘three bay’. Reading the new build guide there are no ‘three bay’ cabinets. The big cabinets are for FTTP and intended to serve up to 3,000 premises or are MSANs providing telephony services to up to 500 premises. The only ‘passive’ cabinet that isn’t FTTP, in which case they’re nearly all passive, is the VMSD0. These have a ‘unique’ shape.

      They may be doing nothing more interesting that moving the last bits of underground plant above ground. In the odd area, central Twickenham comes to mind, where the local authorities really didn’t like street cabinets tap banks and line extenders went underground with only the optical nodal cabinets and MSANs above ground.

      A specific location would be a great help – thanks.

    8. Avatar photo A_Builder says:


      I need to remove my foot from my mouth. I was wrong and you were right.

      The new cabs are not VM but appear to be Hyperoptic.

      I will do a bit more research as they seem to be doing a big rollout in the area. And some of the places this is being done in are not tower blocks which are their usual MO but streets.

      This makes more sense as Hyper had PoP’s around that area for ages so the backhaul was done long agp.

    9. Avatar photo CarlT says:


      Hyperoptic have deals with a few Borough councils. Might be related.


      ‘Hyperoptic says its target 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.’

    10. Avatar photo A_Builder says:


      Well SW6 is Hammersmith & Fulham so I think we are now on the same page……

      Sorry about the dud info before

  3. Avatar photo A_Builder says:

    Great news

    I will bet a lot of hard work went into getting this funded. These guys won’t fund stuff on a prayer so there must be a good business case behind it.

    Now lets see some more fibre in the ground and on poles!

    1. Avatar photo Joe says:

      Absolutely. 2.5Bn commercial is very significant. OR should be nervous

  4. Avatar photo Tim says:

    Awesome news for the UK.

    Sadly nothing in Kent yet again.

  5. Avatar photo Simon says:

    Once again Wales is missed out – ffs – still this might kick BT or hopefully Virgin’s arses to compete – which is good as the whole country benefits then (for VM anyway)

    1. Avatar photo Matthew Williams says:

      True it is kind of weird about networks are willing invest in Scotland but not so much Wales. I believe Gigaclear is actually bidding for the R100 contract but not interested in Wales contracts.

      Clearly Cityfibre are interested in Scotland as well

    2. Avatar photo CarlT says:

      CityFibre are building where they have metro networks. They have a few of their own and acquired others from KCom. Their budget per premises passed is a pretty aggressive one.

      In any event, you’re moving soon so there’re plenty of Openreach FTTP options available, there’s a gigabit community network and here are a bunch of other locations so whether VM compete or not isn’t really a concern.

  6. Avatar photo Matthew Williams says:

    I wonder if Vodafone are putting in any additional investment themselves as on a pure business sense it would make sense. They have been known to do it on the continent.

    1. Avatar photo David Meadmore says:

      Do you really want to be tied to a specific ISP?

    2. Avatar photo Matthew says:

      If that ISP is willing to invest significant money in the UK FTTH market which it needs then yes I am perfectly willing to be tied to a particular ISP. Most of country for many years was tied to Virgin least with FTTH they would get a future proof technology.

    3. Avatar photo David Meadmore says:

      I would argue that VMs pricing is only tempered by competition of FTTC. You appear to have more faith than I do that commercial companies would not exploit a monopolistic position. Note not all FTTP is the same technically and not all ISPs approach the backend the same.

    4. Avatar photo Matthew says:

      True agreed not all FTTP is the same but once done to people’s homes the other upgrades are easier to do. Plus in many of these cities they will already have a strong competition with openreach and virgin

    5. Avatar photo David Meadmore says:

      I think that only applies to the current lower speeds and asymmetrical provision. OR and VM may halt ultrafast investment in certain areas particularly if broadband market share will be insufficient. VM may hang on longer as their content business depends on it but I can see a real prospect of Openreach not challenging in some areas for consumer FTTP concentrating instead on those happy with existing FTTC and selective business FTTP. All providers need a ROI.

    6. Avatar photo Carl says:

      The typical consumer will not care one jot who provides their internet and whether that company wholesales or not or. Nor will they care about other organisations cutting investment in their areas if they get a service from another organisation and are happy with it.

      The trouble with big organisations is they typically think they are untouchable, but when something happens and that immortality they thought they had starts to be chipped away at they cry fowl. I say to them welcome to the world of business and competition.

  7. Avatar photo JimWeir says:

    Without being negative, I’m not sure the opening sentence of “they’ve done it” is quite correct.

    Launching an investment fund is slightly different from subscribing & closing an investment fund.

    Given the owners Antin Infrastructure Partners have just launched a $5.8B fund themselves but would look at 20% investment exposure as a maximum, the money for CityFibre isn’t quite on the table.

    With no Tier1 contractors signed up either, this is a long way from 5M real connections just yet.

    As most analysts are in a holding pattern with UK investments until brexit us clarified, it could be a while before this is fully on track!

  8. Avatar photo Chris P says:

    Will be interesting to see what impact 5G will have on these investments.

    I already get great 4G speeds and low latency, being able to change infrastructure provider as simply as swapping a sim will be much easier than hoping the fibre provider wholesales their infrastructure or a competitor installs their fibre to my home.

  9. Avatar photo CJ says:

    Virgin Media should be the most worried by this. It looks like Cityfibre plan to overbuild maybe 35% of their network with FTTP.

    Openreach already has competition from VM in most of these areas, but if Cityfibre can do them for £500 per premise then Openreach could probably do many of the same areas for a lot less using existing ducts and poles (unless their ducts are in a terrible state of repair). The business case for targeting these areas as a defensive move must look quite compelling.

    1. Avatar photo Carl says:

      “Virgin Media should be the most worried by this.”

      Hardly, for many years Virgin have rolled out product in areas where BT already had presence and BT have done the same rolling out FTTC in areas which already have Virgin. Another supplier to the game especially when it is still for now a smaller supplier than either Virgin or BT is not likely to upset the apple cart too much.

      Virgin and BT do not just spend money blindly and neither expect 100% take up of their product in any area they roll out to, typically if they get around 30% they are happy.

      More suppliers equals more choice more choice equals suppliers analysing where to spend their money, more choice equals better for the consumer. There is no real down side and an every growing amount of new and/or smaller providers to the game is not going to kill or worry the likes of BT. 20 years down the line maybe, but by then how the internet is supplied will probably be nothing like it is now anyway.

  10. Avatar photo FibreFred says:

    This is great news. Let the FTTP competition begin!

    Win win for customers 🙂

    1. Avatar photo CJ says:

      People were similarly optimistic about cable in the 90’s but that didn’t go to plan. Investors lost money, subcontractors went bust before they finished the work and 25 years later there are still many homes stranded in pockets that should have been cabled but weren’t, which aren’t viable for anyone else to target on their own. That was with exclusive franchise areas that guaranteed no competing networks would be built.

      Yes, for homes that get passed by multiple networks the competition will be very good for customers. But that won’t be everyone.

    2. Avatar photo Carl says:

      ^^^ er which is surely why more suppliers is a good thing, those without more likely to become those with.

    3. Avatar photo FibreFred says:

      Oh I know CJ. Which is why we ended up with a patch work of Cable networks.

      Hopefully history won’t repeat.

    4. Avatar photo A_Builder says:

      @CJ “many homes stranded in pockets that should have been cabled but weren’t, which aren’t viable for anyone else to target on their own.”

      If OR don’t FTTP all of the houses in an area they cannot turn of POTs and DSL and they cannot collect the bonus ball of not maintaining copper. So there is a strong commercial driver to do the whole of a PCP and not just bits of it.

  11. Avatar photo Michael Powell says:

    Such a shame Monmouthshire is again out of the loop with any company except Openreach and a few small altnets. What is it with Wales, too hilly, too small, not enough ROI? I’ll be keeping my 5Mb/s connection for another 10 years by the looks of things. So sad

    1. Avatar photo CarlT says:

      CityFibre don’t have a metro network in Monmouthshire by the looks of it. Would cost them too much to build there, the budget is only about 500GBP per premises passed.

      I suspect much of Wales will be at the mercy of the taxpayer in this case which is nothing new.

  12. Avatar photo Richard Woodling says:

    I hope that this investment has been well thought out and planned with the future in mind and not just a desire to provide FTTH to residential premises in a very short timescale. The emerging markets of 5G, IoT, CAV will benefit form fibre provided the fibre backhaul is located such that rework in the future is not is not necessary. ie. plan ahead and keep the capex low for the future. I also question the robustness of shallow cut and cover approaches (if the picture shown above is representative) but I’m no expert in this aspect.

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