Multi Billion Boost to Gigabit Broadband in Rural England Agreed

The Australian-based financial services firm Macquarie Group and UK Government have jointly announced a new £12bn private investment in “sustainable infrastructure“, which among other things includes a plan to help spread “super-fast wireless broadband and ultra-fast fibre” (FTTP) across more parts of rural England.

Readers may recall that there were high expectations of a major investment push by the Macquarie Group a couple of months ago (here). The deal was originally due to be announced in mid-February 2022, during Boris Johnson‘s (UK Prime Minister) state visit to Australia, but this ended up being postponed due, reportedly, to the PM’s domestic problems and Russia’s war with Ukraine.

The good news is that the investment firm has now confirmed that they will commit £12bn by 2030 to infrastructure projects across the UK, including in offshore wind in Lincolnshire and north Scotland, “gigabit broadband in rural England” and hydrogen hubs in Southampton and Orkney – among other things.

Macquarie, through their various infrastructure focused investment funds and deals, are already a familiar name in the UK. Indeed, they’ve supported more than £50bn of investment in the UK in the last 15 years, backing half of the country’s existing offshore wind capacity.

Over the past 2-3 years they’ve also acquired Hull-based “full fibre” ISP KCOM for £627m (here) and later committed £100m to expand their Fibre-to-the-Premises (FTTP) broadband network across more of East Yorkshire and North Lincolnshire. On top of that, they’ve also gobbled other broadband ISPs, such as Wavenet and Voneus. Such deals have often been followed by significant network expansion projects (e.g. Voneus’ aim to cover 100,000 homes in rural areas with full fibre (here)).

Prime Minister, Boris Johnson, said:

“I’m proud that some of Australia’s leading businesses have chosen to invest in the UK, recognising opportunities across the globe in our dynamic and forward-looking economy.

The fantastic schemes announced today will turbocharge the Government’s efforts to create jobs and growth in every part of the country, and put the UK at the cutting edge of the green industrial revolution. This is Global Britain in action – building new partnerships with friends and allies around the globe to create prosperity at home.”

Shemara Wikramanayake, Macquarie Group MD and CEO, said:

“The UK was our first destination when we expanded internationally in 1989 and has remained a strong focus for our investment activity ever since. The UK has been a world leader in the positive utilisation of private capital to meet essential infrastructure needs of communities, including as a global leader in investment in the energy transition.

We look forward to building on our track record of investment of capital and expertise to deliver the next generation of UK infrastructure.”

The announcement fails to clarify precisely how much of the £12bn being committed to infrastructure projects will actually go toward the stated broadband upgrades. But we suspect the level of broadband funding may only end up being a smaller slice, given that the other infrastructure projects for transport, wind, carbon capture, water management and new homes etc. tend to be very capital intensive.

Looking deeper, the new broadband funding effectively reflects an investment boost for KCOM to help them expand “ultra-fast fibre broadband across the North of England” (i.e. beyond the current commitment of £100m). In addition, Voneus will also receive funding to help give “rural English communities access to super-fast wireless broadband and ultra-fast fibre” (most likely as fuel for their existing 100,000 premises target).

Commercial investment alone currently looks all but set to extend gigabit-capable broadband coverage across over 80% of UK premises within the next 3-4 years, thus any additional investment is likely to be focused on the same area as the Government’s current £5bn Project Gigabit (i.e. the final 20% of hardest to reach premises). This aspires to achieve at least 85% coverage of gigabit-capable networks by the end of 2025 and then “nationwide” coverage by 2030 (here and here).

The exact detail of Macquarie’s plan will no doubt follow in due course, and the agreed investment remains subject to customary closing conditions, including any relevant regulatory approvals.