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Rural ISP Gigaclear Signs £525m Long-Term Funding Strategy

Friday, April 3rd, 2020 (2:02 pm) - Score 2,807

Rural UK full fibre (FTTP) broadband ISP Gigaclear, which since last year has been working with their investment partner Infracapital to develop a “long-term funding strategy” (including an assessment of further debt funding), has today confirmed to ISPreview.co.uk that they’ve secured £525m in financing.

The provider is currently still in the recovery phase after many of their projects’ suffered significant deployment delays during 2018-2019, which followed various problems with resources, planning and management. The situation also resulted in the loss of a significant 1Gbps Fibre-to-the-Premises (FTTP) roll-out contract across Devon and Somerset (here).

NOTE: Gigaclear’s original ambition was to cover 350,000 rural premises with FTTP by the end of 2021, then 500,000 by 2025 (they’ve so far done 129,000 but some may not be live).

However, since early last year, a lot of work has gone toward putting the operator back on the right track and steady progress is now being made. As part of that the operator’s CFO, Ian Wade, has been busy behind the scenes developing a new long-term funding strategy and the fruits of that are now coming to light.

As we understand it Gigaclear has secured £525m in financing from Lloyds, Natwest, Santander and ABN Amro. The package consists of a £480m seven-year capital expenditure facility and a £45m revolving credit facility.

Gareth Williams, CEO of Gigaclear, said:

“We are really pleased to have concluded the debt funding as outlined in last year’s annual report. We would like to thank our shareholders for their continual support, and to welcome the Banks, as they provide the funding for the next stage of our exciting story. The funding will be invested in the expansion of our network.”

We should point out that the ISP hasn’t put out a huge announcement about this development, which would normally attract a lot more publicity. The operator felt as if, given the current COVID-19 (Coronavirus) crisis, a bigger announcement at this time might not have been appropriate.

Nevertheless this is a significant development for the provider and one that should help to secure their future roll-out plans. We hope to get more details once things start getting back to normal around the UK.

Leave a Comment
11 Responses
  1. Avatar AnotherTim

    I hope that Gigaclear will now be able to finish planning the (much revised) roll-out for my area which was originally supposed to be live by the end of 2018.

    • Avatar 1pf

      Yep especially along A40 in Gloucester between Huntley and Ross where fastershire failed to install in the first place and Gigaclear still have not reached+areas around yes)

    • Avatar A

      According to one.network they seem to be heading north through Longhope and Micheldean, and I had expected them to continue and fill in the missing bits along the A40, but there is no further works listed anywhere that I can find.
      According to Fastershire they have changed/merged the areas for all remaining builds, so just the areas shown on Gigaclear’s website are out of date. My area is now part of the ‘Stroat Chepstow (South West)’ build, which I guess is the amalgamation of the Beachley, Sedbury, Woodcroft, and Brookend areas, with a build start date of June 2020. But with no works planned, no contact with Parish Councils, and Covid-19, I’m expecting another slip of dates.
      At least they won’t now run out of cash before they start.

    • Avatar 1pf

      Thank you A

    • Avatar AnotherTim

      BTW, not that it matters but “A” was me – I hit the wrong key. If I ever hear any more I’ll post it to the Gigaclear forum.

  2. Avatar MikeP

    Looks like it’s primarily debt financing, not equity, given the involvement of the banks.

    Which is short-term financing of a long-term infrastructure investment. May not end well – at least for the shareholders.

    • Avatar wirelesspacman

      As long as it is done sensibly, it should be fine. The investments should become revenue generating pretty quickly (if done well!), generating a decent amount of free cash that can be used to service (a sensible amount of) loans.

    • Avatar Phylomena Brown

      Is the glass half full, half empty scenario here? Positivity is the key.

  3. Avatar Bobthefibrebuilder

    I assume that’s £480M over seven years. With the low cost of debt these days you would be doing something pretty wrong if you couldn’t afford it. You should have connected quite a few homes with that kind of cash.

    Basically it generates a good solid return for the banks, albeit quite a small return. But at the moment who can generate high returns over the long term. It’s all about stable returns right now and broadband connectivity is pretty stable at the moment.

  4. Avatar Highlandworrier

    Was there any comment on their legal challenge to R100 LOT1?

    Its already added another 3 months to the planning process as OpenReach cant do any work on planning for the next steps for the most complex challenge within R100

    I appreciate everything is affected by COVID19 but it would be good to understand how long this legal challenge will take

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