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CityFibre Secure GBP1.1bn to Fuel UK FTTP Broadband Rollout

Thursday, September 16th, 2021 (7:07 am) - Score 4,176
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CityFibre, which currently aims to cover 8 million UK premises with their gigabit-capable Fibre-to-the-Premises (FTTP) broadband ISP network by around the end of 2025, has today secured another major investment boost of £1.125bn from the owner of Ikea (Interogo Holdings) and Mubadala (Abu Dhabi’s sovereign wealth fund).

The operator’s existing rollout was already being supported by a huge investment from the combined weight of both the West Street Infrastructure Fund (Goldman Sachs) and Antin Infrastructure Fund – each previously held a 35% stake in the business.

NOTE: Cityfibre is supported by various ISPs, such as Vodafone (Gigafast Broadband), TalkTalk (Future Fibre), Zen Internet, Giganet and others, but they aren’t all live or available in every location.. yet.

As part of that, CityFibre planned to invest £4bn to cover 1 million UK premises with their FTTP network by the end of 2021 and then 8 million are expected to be “substantially completed” across 285 cities, towns and villages – c.30% of the UK – by the end of 2025 (here). This potentially also covers 800,000 businesses, 400,000 public sector sites and 250,000 5G access points.

However, CF has previously indicated (here) that they were busy negotiating the sale of a 30% stake in the company to a third major investor, which would help to fuel both their existing deployment plan and enable them to compete for rural deployment contracts under the Government’s new £5bn Project Gigabit programme, which is an area that they’ve already trialled (here).

In theory, the extra investment, when combined with successful contract wins under Project Gigabit, could see their future network coverage expand beyond its existing target of 8 million premises (this target is already well funded), and possibly reaching up to 9-10 million premises. But this does of course depend upon how many contracts they’re actually able to secure via the Building Delivery UK run procurement process, which is still a big question mark.

As a result of today’s deal, Interogo Holdings and Mubadala will now take a stake in the business worth £825m. On top of that, CityFibre has also secured a £300m extension to their bank loan agreements, with Crédit Agricole CIB, and National Australia Bank, also joining the syndicate alongside other major global financial institutions including ABN Amro, Banca IMI, BNP Paribas, Lloyds, NatWest, and Société Générale.

Greg Mesch, CEO of CityFibre, said:

“We’re thrilled to announce the completion of a £1.125bn capital raise, the largest ever secured to support the UK’s Full Fibre future. We also take great pleasure in welcoming Mubadala and Interogo Holding as new investors in this important project. This new capital will not only underpin our rollout to up to 8m homes across 285 cities, towns and villages, but will also enable our participation in the Government’s ‘Project Gigabit’ programme to extend our future-proof infrastructure to rural areas and ensure no one is left behind.

This capital raise is proof of the benefits of a truly competitive infrastructure market, as envisaged by both Government and Ofcom. If nurtured and protected, infrastructure competition at scale will continue to unleash huge investment from the private sector as well as catalyse investment from incumbent operators. Ultimately though, it is residents, businesses and the UK economy that stand to benefit, with competition driving what has become the fastest rollout of Full Fibre in Europe.”

Waleed Al Mokarrab Al Muhairi, Mubadala’s Deputy Group CEO, said:

“Digital Infrastructure is a vital enabler of social and economic progress, and a priority growth sector for Mubadala, so we are delighted to be the lead investor in a fund-raise which is accelerating the roll-out of world-class digital Infrastructure for one-third of the UK.

Mubadala’s investment in CityFibre is consistent with our mandate to deliver sustainable financial returns. As the first investment under the infrastructure vertical of the UAE UK Sovereign Investment Partnership, it exemplifies the Partnership’s mandate to guide high impact investment to enable future-focussed economic growth.”

Admittedly, it will still take several years for CF to truly build itself into being the country’s third major infrastructure competitor after Openreach (BT) and Virgin Media (VMO2), both of which have major FTTP expansion and upgrade plans of their own (here and here). For example, Openreach aim to cover 25 million UK premises by December 2026 and VMO2 could potentially reach just a little shy of that.

As for Project Gigabit, a recent progress update from the Government (here) indicated that the first contracts aren’t expected to commence until May 2022, but targets like this should be considered optimistic and assume no delays due to the admin side or disputes between bidders (not an uncommon issue in competitive procurements).

Once awarded, we’d normally then expect to see a rollout plan emerge a few months after such an award (i.e. building might not start until the latter half of 2022). The first rollout phase will include 349,000 premises in Essex, Dorset, Cumbria, Cambridgeshire, Northumberland, Durham, Tyneside, Teesside and Cornwall.

We hope to see a fair bit of competition between bidders in the Project Gigabit procurement, at least in some areas, which may make it harder for smaller players to secure contracts. Suffice to say, CityFibre’s extra funding will come in handy here.

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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.
Leave a Comment
6 Responses
  1. Steven Brown says:

    That’s a fair chuck on change

  2. SM says:

    “As for Project Gigabit” … “The first rollout phase will include 349,000 premises in Essex, Dorset, Cumbria, Cambridgeshire, Northumberland, Durham, Tyneside, Teesside and Cornwall.”

    Is it true that these areas getting Project Gigabit funding can’t have the funding for areas where a commercial provider has already suggested they want to eventually cover locations in those counties?

    EG: Openreach announcing hundreds of locations, with builds pencilled in for the next 5 or so years, after the Project Gigabit had been announced.

    Or Have I mis-understood that?

    1. Mark Jackson says:

      If a commercial project has committed funding to deploy into an area, then of course the Government will generally not use public funding to achieve the same outcome as it would be a waste of the public purse. The goal of public funding in such a project is to resolve market failure, but if the market has not failed, then you don’t use it.

    2. CJ says:

      I’m not sure about 5 years ahead but essentially yes if there are credible plans for a commercial operator to provide a gigabit service, which includes Virgin Media cable, those premises are excluded.

      Each project gigabit procurement starts with a consultation to identify properties with commercial plans.

      Premises can be added back into scope at a later date, so they’ve allowed for the possibility of commercial operators not following through with their plans.

  3. Mr bengie HARPER-PITTAM says:

    More press releases than connected homes.

    1. Mark Jackson says:

      To be fair, it does very much look like they will achieve 1 million premises passed by the end of this year. No small achievement.

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