Hyperoptic Get £500m to Bring Forward 1Gbps UK Broadband Rollout
City focused “full fibre” (FTTP/B) broadband ISP Hyperoptic has announced a significant equity raise with the investment arm of the Government of Abu Dhabi (Mubadala Investment Company), which in total means they will now have £500m to help them bring forward their roll-out to reach 2 million UK premises by 2021.
At this stage they’ve not yet disclosed exactly how much money Mubadala plans to push into the ISP, although if the total is now £500m then based on past investment news we can speculate that it must be at least £75m (likely more since the £500m is being expressed as a total that will be used over the next 3 years). Only a few months ago Hyperoptic confirmed that they had raised £250m via debt (here), which was on top of the £175m or so of private investment that had been raised since they first came to life.
At present their 1Gbps capable ultrafast full fibre network is said to cover well over 500,000 UK premises in parts of multiple UK “Hyper Cities” (expected to reach 50+ cities and towns by Q1 2019). Until today the aim was to then reach 2 million premises by 2022 and after that there was a future aspiration to reach 5 million premises by 2025 (here). As a result of today’s news the first target will now be hit in 2021 and the second in 2024.
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The ISP’s normal approach involves connecting their Fibre-to-the-Premises (FTTP/B) style network to large residential or office buildings in dense urban areas (e.g. Multi-Dwelling Units with at least 50 units), although they have also expanded to do lots of council (social) homes.
Mounir Barakat, Executive Director of Mubadala ICT, said:
“We have been following Hyperoptic for the last couple of years and have been impressed by the impact they have had on the UK fibre market, taking a strong leadership, catalyst and disruptor role. We are excited to be joining the Hyperoptic team, providing substantial capital and balance sheet power as support for their clear vision for the future of the UK telecom market.”
Boris Ivanovic, Hyperoptic’s Chairman, added:
“Backing by such a significant sovereign wealth fund, not only provides the firepower to deliver on our plan and vision, but is a further proof of the road we have taken in fundamentally transforming a very slow and reactive UK telco market. Together with the new management team, the road ahead is very exciting indeed.”
One other good bit of news to come out of today’s announcement is that Hyperoptic will aim to extend their deployment via over 5,000 kilometres metro fibre network using Duct and Pole Access (DPA) by 2021. This is the regulated name that Ofcom has given to the process of allowing rival ISPs to access Openreach’s (BT) existing cable ducts and telegraph poles in order to run their own fibres (aka – Physical Infrastructure Access).
The initial cities to benefit from this DPA approach will include Greater London, Manchester, Glasgow, Edinburgh, Liverpool and Leeds in 2019. A further 10 cities to be covered in 2020 will be announced in the second half of 2019. Crucially this metro fibre deployment “will allow Hyperoptic to broaden its reach beyond its traditional focus of large residential blocks, to extend service to smaller blocks, housing, and businesses.”
At this stage it remains to be seen how much ordinary “housing” might be reached by the new approach, although it’s impact looks set to represent only a small slice of their overall roll-out plan. Nevertheless today’s news certainly adds further competition into the increasingly competitive market for “full fibre” (FTTP/H/B) broadband deployments, which is already in desperate need of more skill telecoms engineers.
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On closing of the new transaction, Mubadala will acquire a minority stake in the Company and Mounir Barakat, Executive Director (ICT) will be joining Hyperoptic’s Board of Directors as an observer. We note that LionTree Advisors acted as the exclusive financial advisor to Hyperoptic for this deal.
The ISP has also announced additions to their senior management team to support its rapid development and growth, including: Charles Davies as MD ISP, Moray Falconer as MD Infrastructure, Boris Dragovic as Chief Strategy & Transformation Officer (CSTO), Pascal Koster as Chief Technology & Information Officer (CTIO) and Daniel Butler as Director Communications and Policy Strategy.
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 Linkedin.
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More good news for consumers.
I can actually see some this stuff going into the ground at the moment when I am driving around London so I am pretty confident that this isn’t just talk.
Going back to threads a year ago OR’s lunch is being eaten pretty rapidly.
BT did have a Race to Infinity now OR have a Race to Survival as the majority network. Like it or not OR have got to keep building beyond the 3M promised so far. Let me put it this way if they stop they just gift all the trained engineers to everyone else who has funding and then will rapidly get build out of their core connectivity market.
Anyway well done to Hyperoptic for actually getting stuff done for prosumers.
BT Group shares just fell 1.69% they really have shot themselves in the foot backing copper.
Price is back to where it was last Thursday. A day does not a trend make.
That the stock has lost half its value over the past 3 years, however, is a different matter. Looks a lot like the stock price has been supported by dividends that the company can’t really afford now so they’re going to have to get rid of them. Can’t generate 5 billion in cash, spend 3.4 billion on CapEx, a billion on plugging the pension deficit, pay interest on loans, commit to ‘Fibre First’ and pay 1.6 billion in dividends sustainably.
As far as I am aware, all Hyperoptic services run over Openreach EAD circuits.
BT Share price is reflecting their debt level and recent changes have been due to speculation of Openreach sale and BT takeover by Deutsche Telekom. The debt is limiting BT Groups investment. Do they back 5G (EE) or FTTP (OR) and what investment do they make for their PSTN replacement?. Realistically they need to do all three but it is not an easy balancing act along with the future of BT TV.
Allowing competitors to utilise the BT ducts via OR is inevitable and OR will not resist it as long as the integrity and quality of the plant does not suffer. OR do not need to go head to head with the likes of Hyperoptic. The plant needs to be maintained and can not come free.
Hyperoptic are getting on with it and not winging like Cityfibre.
If the likes of Hyperoptic can up the speed of FTTP coverage by utilising current PIA processes so much the better. There is more than enough for all to to do.
@Meadmodj & @CarlT
Sort of.
I think the major issue on the share price was the historical lack of investment. This dates back to Valance et al and their begging bowl tactics over trying to get the 1990’s governments (?) to contribute about £1Bn (?) to the last drop replacement project to get fibre into the last drops.
Shareholders are a bit worried by the cliff of a copper sunset and a distinct lack of anything to replace it that generates a stable ROI. If there was more fibre in the ground and on poles this would not be such an issue.
Major shareholders were for a long time telling BT to spend more on fibre – yes really. If they had been steadily dribbling money into this over a 10 year period the CAPEX was perfectly doable. Trouble is there is now a rock, a hard place and a cliff edge to deal with. All of BT’s own making. And I say that as a long standing shareholder.
If there was a long term component to BT that gave it a long term revenue stream that covered the pensions and loans nobody would be too worried.
Once BT have got a commitment to 10M and a trajectory to get there then I see the share price recovering provided this is done is such a way as the place is not swimming in debt. OFCOM coming up with a copper off system would also help a lot.
@A_Builder Problem is they have only a few months before DT could launch a takeover bid and with the share price how it is makes it even more likely. BT have been waiting to long they needed announce the commitment to 10 Million earlier this year they didn’t and allowed Vodafone/CityFibre to secure investment and now Hyperoptic has also secured investment.
OR currently at around 10,000 per week with an aspiration of 20,000 per week which equates to 1 million a year. I can’t see resource above that.
BT/OR face Ofcom interference on DSL and 4G/5G which perpetuates the uncertainty Ofcom have created for 30 years.
With a back drop of lots of consumers not wanting to pay more than say £30 per month retail for broadband and further 4G/5G offerings in the wings I think OR are correct with their FTTC/G.fast/FTTP strategy. BT can sweat their asset and divert between technologies as necessary.
@Meadmodj
Personally I don’t see a problem with a committed roll of one million per year. This is building asset value on the balance sheet as well as long term cashlflow and GP – those are all upsides.
It is the commitment to the total build that is important and the long range timeframe that are needed both to get OFCOM onside for the copper off and to get the share price back up.
Investors a less interested in quick fixes to secure the divvy than they used to be because there are a lot of independant research papers done that look at the underlying asset value etc. 20 yrs ago all you had to do was have a steady divvy and the pension funds were your best mates. Now it is a bit more open and sophiositcated.
Excellent news. Congratulations to Hyperoptic. Amazing what saving cash for a rainy day and building a sovereign wealth fund allows nations to invest in. *Looks at Norway’s $1 trillion and drools.*.
Our Wealth fund if the government is to be believed is called Foreign Aid lol.
@Matthew, Norway is top 10 in the list of donor countries https://www.bbc.co.uk/news/uk-politics-39658907 , I hope you’re not insinuating that foreign aid somehow precludes having a healthy wealth fund. It’s a much smaller economy than the UK too of course.
@spurple I’m not saying that i’m saying that’s how the government sees it. Norway has done very good for it self with it’s EEA membership
That and treating North Sea fossil fuel revenues as a bonus rather than feasting on them like a child in a sweet shop of course.
Norway appear to manage to spend over twice what we do on foreign aid as a proportion of the economy, about 1.5% of GDP compared with 0.7% from us.
Though they do have taxes that would make most people’s eyes water, the cost of living is also very high offset by very high wages. Tax to GDP ratio of 38% in 2016 compared with Great Britain at 32.7%.
Still, all good fun.
The SVFs are almost all held by nations with small pop and high natural resources. If Norway had our pop their Swf woulnd’t be what it is.
5 million to give people in London fibre. Awesome.