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Cityfibre Hail Largest £1.12bn Debt Financing for UK Full Fibre Rollout

Tuesday, December 18th, 2018 (7:32 am) - Score 2,802

Cityfibre has today confirmed that they’ve put in place a new debt financing package worth £1.12bn, which will support their wider £2.5bn roll-out (details) of a new 1Gbps capable Fibre-to-the-Premises (FTTP) broadband ISP network to cover 5 million premises across 37 UK cities and towns by the end of 2024.

The deployment project, which is being supported by Vodafone, officially started last year with a funding pot of £500m (Phase One) and this was recently increased to £2.5bn. At the time the operator noted that this investment would reflect a combination of debt and equity, although the exact details were not revealed.

Today Cityfibre has followed this up by announcing that they’ve put in place a debt package of £1.12 billion from seven major financial institutions, including ABN AMRO, Deutsche Bank, Lloyds Bank plc, Natixis, NatWest, Santander and Société Générale. The operator claims that this is the “largest debt financing package dedicated to full fibre rollouts in the UK’s history” and will support their initial roll-out to 2 million premises.

The package includes a £775 million seven-year capex facility and £45 million revolving overdraft and working-capital facility. It also includes a £300 million accordion facility. Rothschild & Co acted as financial adviser to CityFibre and Latham & Watkins as legal adviser.

Terry Hart, CityFibre’s Chief Finance Officer, said:

“The appetite from these institutions to support our financing is further evidence that CityFibre’s strategy is the right one for the UK.

As our networks are rolled out, this will benefit everyone, driving innovation and increasing fibre penetration across the UK, providing the future-proof digital connectivity the UK needs.

CityFibre’s target to reach five million homes by 2025, as well as thousands of businesses and public sector sites, will catalyse huge economic growth in regional towns and cities across the country.”

Cityfibre is currently in the process of hiring 5,000 engineers to support their roll-out (challenging in the current market, where demand for such skilled telecoms engineers often outstrips supply).

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)
Leeds (£120m)
Southend-on-Sea (£35m)

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

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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 Twitter, , Facebook and Linkedin.
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18 Responses
  1. David says:

    Did NTL not spend over £40 bn all those years ago before it became Virgin Media?

    1. Mark Jackson says:

      NTL did not do that to build a “full fibre” FTTP network.

    2. Optimist says:

      I think it was during the 1980s that Bell Cablemedia and others wired up many areas in the hope that people would sign up for a TV service. But most people were content with receiving TV off-air and renting videotapes. The internet boom came to their rescue.

    3. Alan says:

      No, NTL per-se did not directly invest £40billion in network build out.

      In 1993 23 cable companies were given franchises to lay cable around the UK. In Kent, for example, the contract was given to Jones Cable Company. Who? Exactly, most got as far as laying cable but were awful at service provision. JCC went under/acquired around 1994/5, just after I moved from Kent to Yorkshire.

      In similar vein, most of the others underwent merger/acquisition before signing a single customer. High staff costs (cable pullers earned £1000/week – heck of a wage for the mid-90’s).

      By 1996 there were three players left; Nynex, Telecential, and Telewest. One of Telecentials areas was Basingstoke. By summer 1996 I had moved here, and they had built out, and were conducting tests. On the eve of launching their service, they were acquired by Telewest. Who promptly halted the launch, so they could conclude their tests…

      By 1999 we were still awaiting a cable service. I had just returned from the US, where I had used cable; wow, 700kb/sec! Blazing 😉 And TW merged with Nynex to form NTL. And guess what – service delayed again.

      NTL in turn were acquired and/or renamed Virgin sometime later, in the first half of the new century.

      So Virgin broadband, at its core, has a network originally built by 23 other companies, but invested very little directly.

    4. CarlT says:

      Telewest and Nynex did not merge to become ntl. ntl was born when Cabletel purchased National Transcommunications Ltd and adopted their name.

      Telewest and ntl merged, acquired Virgin Mobile and rebranded as Virgin Media in 2006, 2006 and 2007 respectively.

      That there were apparently only 3 cable companies left in 1996 will I imagine be a surprise to those working for Bell Cablemedia, Cabletel/ntl, Videotron, Comtel, Cable and Wireless ConsumerCo and others at that time.

      If I remember rightly ntl acquired the Nynex networks, not Telewest.

    5. CarlT says:

      Lastly Basingstoke has never had cable run by Telewest.

      Basingstoke had an optical relay taking its feed from Winnersh then Reading. That part of the country, Reading, Wokingham, Winnersh, Basingstoke, Bracknell, etc is all fed by Reading, and going slightly further south to Southampton and surrounds you reach the ex-Videotron/ex-Cable and Wireless ConsumerCo networks passing much of the rest of Hampshire.

      The original ntl areas in Hampshire are all fed by Reading hubsite, the former CWC areas are fed by others: Southampton, Cosham, Portsmouth, Fareham, etc. I’m not aware of Telewest having any cable network in Hampshire at all but welcome correction.

  2. A_Builder says:

    More good news for UK PLC.

    More SME’s will be able to afford decent connectivity and it will boost the economy of those areas.

    I am sure the cynics will say it is all talk and no build but these are serious people, who have built networks before, now with hard cash to spend.

    More of OR’s lunch being eaten……their fault for being so slow.

  3. Meadmodj says:

    We all know BT Group have high debt and hence why OR investments are currently restricted.

    Good news that Cityfibre have secured more financial certainty for their proposals. Again it proves that the financial case for FTTP is there.

    However we don’t know all the figures and the Cityfibre numbers appear to infer an optimistic view regarding higher product up-sell and market share. A high percentage of consumers will continue to go for entry level products and there will be significant competition in some of the towns proposed.

    Much will depend on the economy (B or no B) and the cost of borrowing over the next few years.

    1. A_Builder says:


      I am not sure I agree.

      The need for higher bandwidth and lower latency will push people off copper based solutions and that includes VM.

      If there is nothing else then the take up will be high for those who perceive a need.

      Consumers expect everything to be instant now from delivery to upload and impatience will be a big factor.

      So I am not so negative about the prospects of this working.

      And B or no B will drive difference forms of economic activity and development and either way better connectivity is simply and enabler and where you have it you don’t have to waste time and effort on work around(s). Believe me a lot of business thinking and time is waste on how do we get round this awful ADSL connection etc.

    2. AnotherTim says:

      I’m not convinced that it does prove the financial case for FTTP – the proof will only come when the ISPs make profits from their investments. With multiple companies targeting cities with ultrafast broadband there will be quite a bit of competition, so profits may not be as forthcoming as they hope. When users have a choice of superfast/ultrafast broadband most will choose the cheapest, which will drive prices (and profits) down.
      Meanwhile outside cities and large towns some of us are left with ADSL or 4G as the only option.

    3. Optimist says:

      It will be interesting to see how much business Openreach will lose in areas where alternative delivery networks are built. For how long will it still be viable if it depends on non-fibre areas for its revenues? Does Ofcom have a fallback plan?

    4. Joe says:

      @Mead “Good news that Cityfibre have secured more financial certainty for their proposals. Again it proves that the financial case for FTTP is there.”

      In cherry picked locations that was never in doubt.

      @AnotherTim I suspect the market will consolidate fsirly shortly after the major rollouts of fb end. As it did with cable/sat

      @Builder “The need for higher bandwidth and lower latency will push people off copper based solutions and that includes VM.”

      Yes but prob not quick enough

    5. AnotherTim says:

      @Joe, yes I’m certain that there will be massive consolidation in a few years time. Many FTTP ISPs will discover that they aren’t profitable after all, so will go under or be bought out. The result will be a few monopolistic companies with ragtag networks, which are difficult to maintain and improve. End-user costs will rise, and network expansion/upgrades will stop.
      And some of us will still have ADSL.

    6. Meadmodj says:

      @A_Builder. When I was referring to entry level products I was referring to FTTP not the migration from FTTC which is another factor (FTTC take-up as example). Most consumers do not need Giga speed and are unlikely in the near future therefore if they can get the benefits you outline using a 30 Mbps FTTP for say £35 (ISP) offering the ISP revenue and the wholesale product will produce a lower ROI. Although the price differential between products 30/50, 100, 300 and 1 Gig may be small consumers will still consider this difference important.

      Take Crawley where they will be up against OR and VM. The risk is that these may revise their technical stance on legacy and OR are likely to be rolling out FTTP within the Cityfibre investment period. Other providers such OFNL are also in town.

      My point is Cityfibre will have included market share and predicted revenue in their business plan. My maths may be crude but I can’t see how they can make a return in 7 years unless they gain significant market percentage and high revenue per customer.

    7. Joe says:

      @Tim. Even if you emulate pstn it costs far more than pure voip. So they will kill adsl as fast as possible.

    8. CarlT says:

      Not aware of anyone who thinks VM’s latency is a problem when all is working properly. No application comes to mind besides competitive gaming where its jitter is an issue.

      Plenty of life left in it bandwidth-wise too. TDC Denmark are selling 1000/500 on hybrid network, this without the full duplex variants.

      Most people remain far too cheap to want to pay a premium. The biggest threat to the FTTP business case is the ‘free broadband forever’ TalkTalk customer base.

  4. Matthew says:

    I think Gigaclear has one of the best models with future potential to be honest. They are going have a monopoly in quite a few rural areas in next decade or so. Less customers true but it works for KCOM in Hull having a dedicated small base of customers.

    1. AnotherTim says:

      The problem I have with Gigaclear is that they have BDUK contracts for quite a few areas, but are making no progress in many of them. The Fastershire areas no longer even have target dates, and although some builds are in progress, at the current rate of spread of their network it will take another 6 years to get to my area.

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