Toob Get £300m UK Funding Boost for FTTP Broadband Rollout UPDATE

Alternative network operator and ISP toob, which aspires to cover 1 million premises across the South of England by 2027 – mostly in Surrey and Hampshire – with their Fibre-to-the-Premises (FTTP) network, has today announced that they’ve secured a funding boost worth up to £300m to help boost their deployment.

Just to recap. The operator, which was originally backed by £75m from the Amber Infrastructure Group (here) and “up to” £87.5m from the Sequoia Economic Infrastructure Income Fund (here), has been deploying their gigabit broadband service across locations such as Southampton, Camberley, Aldershot, Farnborough, Fareham and Gosport etc.

According to today’s announcement, the full fibre network has so far managed to cover around 140,000 premises (up from 100,000 in Oct 2022) across Southampton and other towns in the South of England (unclear if that’s all Ready for Service). On top of that, they’ve also grown a total customer base of 20,000, which reflects a take-up of roughly 14.3% and rising. But today’s funding boost will see them raise their target for the next rollout phase.

The company has managed to secure more than £160m of additional funding (debt financing) from Ares Management‘s Infrastructure Debt strategy, which is able to be upsized up to £300m over time to support future growth opportunities. Funds managed and advised by Amber, toob’s current shareholder, will also invest significant further equity.

As a result of this, toob’s next deployment phase will now aim to extend their full fibre coverage to reach more than 120,000 connected customers on a network of over 300,000 premises, although there’s no mention of any timescale for when this might be achieved. Interestingly, the provider states that its next network expansion phase will come “through organic build or consolidation” as the UK fibre market “starts to unfold“.

Nick Parbutt, CEO, toob, said:

“We are delighted to have the financial support of James and the team at Ares. This complements the backing we have enjoyed from Amber Infrastructure since late 2018. toob has always focused on delivering for our customers through a simple and compelling broadband proposition. This investment gives us the capital to extend our network to over 300k premises, and most importantly, it secures the business through to profitability as a platform for growth.

With this commitment from Ares and Amber, we can develop toob, either through further network build or M&A activity. We are very pleased that the business and our team have an exciting future ahead of us as we deliver for more communities across the South of England.”

James Fox, MD in Ares’ Infrastructure Debt strategy, said:

“We are pleased to be partnering with the high-quality teams at toob and Amber to support the continued rollout of toob’s full fibre network to towns across the South of England. This funding aims to help bring enhanced connectivity to historically underserved areas. We look forward to working closely with Nick and the toob management team as they enter the next phase in their development.”

Michael Gregory, Head of Asset Management at Amber, said:

“We are delighted to partner with the team at Ares. This further capital is testament to the strength of the management team and their focus on commercialisation and efficient unit capex metrics. We also look forward to evaluating further M&A opportunities with the support of Ares, as the UK fibre market starts to consolidate.”

Customers of the service typically pay just £25 per month on an 18-month term for their 900Mbps (symmetric speed) package (£29 thereafter), which includes a router, unlimited usage and free installation. Suffice to say that they’re one of the cheapest providers in the market and, despite rising costs and high inflation, they’ve opted to keep the prices frozen again.

We should add that toob, despite building their own network, also holds a network access agreement with rival CityFibre, which sees both networks able to benefit from each other’s deployments (here). Otherwise, toob was advised on today’s deal by Lincoln International, Norton Rose Fulbright, PwC, Altman Solon and Deloitte. Ares was advised by Ashurst.

UPDATE 26th May 2023 @ 2pm

Toob has kindly confirmed to us that they have c. 140,000 premises passed on their own full-fibre network, with the “vast majority ready for service” (no specific figure for RFS was given), and c. 20,000 customers. Approximately 95% of their customers are on toob’s own network, with the remainder on CityFibre’s network.