CityFibre Close to £2bn Funding Deal for UK Full Fibre Broadband Plans
Alternative network operator CityFibre, which has already built a gigabit-capable full fibre broadband (FTTP) network to cover 4.3 million UK premises (RFS), is reportedly set to sign a £2bn funding deal – reflecting a split of debt and equity – to help keep them in business and support their plans for a major consolidation of rival operators.
The operator’s existing funding is due to run out soon, and thus the operator is keen to reach an agreement on fresh funding before the end of July 2025. Previous reports had indicated that this would reflect a £500m equity financing deal with existing investors (here) and around £1bn of incremental debt funding – roughly enough liquidity to keep them fuelled through to mid-2027 and equity to support their M&A (consolidation) drive.
However, a new report from Bloomberg (credits to Ionide for spotting this) indicates that the proposed deal is also set to include a new “accordion” facility, which will allow CityFibre to tap an additional £500 million under certain conditions – effectively making this agreement worth up to £2bn. Details on what those conditions might reflect are still unclear.
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CityFibre currently still aspires to cover up to 8 million UK premises with their new FTTP (XGS-PON) broadband network – representing c.30% of the UK. But their original target of hitting that by the end of 2025 will be missed. The operator has instead shifted their strategy to focus less on build and more on growth via mergers and acquisition (M&A) of alternative networks (e.g. the deals to acquire Connexin [here] and Lit Fibre [here]).
At the same time, the operator remains under the same pressures as many other networks, not least due to high interest rates, rising build costs and competition, which has already impacted some of their commercial deployments. On top of that, one of the operator’s key ISP partners, TalkTalk (accounting for c.150k CityFibre customers), is struggling in ways that could risk wider harm in the future (here).
Despite this, CityFibre’s main shareholders recently said they “remain committed … [to the company’s] long-term success and are actively engaged in supporting the company’s next phase of growth“, while the operator itself claims to be “in a strong position” and “expects to announce details of our financing shortly” (here).
According to a previous note from analyst James Ratzer – in 2025 and beyond, it’s expected that CityFibre will likely only build FTTP out to c.300k homes per annum organically, largely to meet their state aid backed Project Gigabit contracts. But the operator still aspires to add around 1 million premises each year, which suggest c.700,000 will be coming from M&A deals (c.100k – 185k of this in 2025 was covered by the Connexin deal).
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The catch is that consolidating alternative networks tends to be a slow, complex and costly process – particularly with many altnets still harbouring an inflated idea of their own asset values. CityFibre’s strategy around this thus remains somewhat unproven, and any new funding deal they strike now will be subject to less favourable conditions than they had before (e.g. interest payments will be higher). Put another way, this may not be the last funding deal they’ll need.
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 X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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Brilliant news for cityfibre more than anyone was expecting. Now the game begins to complete M&A, continue to take lines from BT / VMO2 and then hope by 2027 they have 30% penetration across the board.
Great news for City Fibre, not so great for vultures like Vermin Media.
They need to concentrate on take-up in areas where they are without going stupid on advertising.
@Big Dave: Just what I was thinking – Not so, SWEET FANNY ADAMS 🙂
the cable TV-like trajectory continues. Piles of debt, massive integration hassles from the patchwork quilt of networks bought or to be bought, and not paid for through unsustainably cheap pricing.
All while Openreach look set to exceed them on every metric aside (possibly except price until Ofcom see sense and deregulate, allowing competition to finally flourish)
Depends on what you deem to be ‘hassle’
Onboarding new OLT vendors is not a struggle, it’s what they are good at. Plenty of resource and time allowed to automate deployment to the new systems (assuming there are any) or wiping and rebuilding configs to the CF standard.
Piece of cake.
Not to mention the fact that Openreach are building the equivalent of CityFibre’s entire network every single year for at least the next 18 months.
There’s a difference between integrating a brand new vendor from scratch and having to deal with the way someone else integrated it originally. I know some of these altnets are basketcases but presumably there are actual customers on the network and as such you can’t just factory reset the OLTs and ONTs and start again.
Then there’s the question of how to deal with wholesale customers (if any exist), or how to offload the retail operations because CF clearly doesn’t want to be in that business themselves.
That’s before getting into more difficult issues to overcome – Openreach PIA vs DIY ducting, locations of headends, architectural differences such as cable vendors and splits, installation practices, etc. It even complicates ongoing customer service tasks, for example how many pictures of ONTs will CF and its ISPs have to show customers to identify what’s in their home?
These are issues that Virgin Media still grapples with. It took them years to unify the TV operations (from at least three different architectures) and their TDM telephony platform is still split across 6 or 7 different vendors/configurations.
Shame the BT product is so lame and legacy. Cityfibre based product any day, not GPON asymmetric garbage.
Look the shareholders are here again, the people that would love Openreach to be the only network in the country.
Since we can’t have a dark network country wide either owned by the government or a non-profit-making company, then we have to have different networks.
BT/openreach is not in the best place finance wise either, That is why their shareholders are scared, BT only got to where they are because they grabbed the original network for a pittance and took what they could from the British public for years with sky-high line rental prices, when most of us did not have a choice.
No mobile phones.
So I am glad we now have choices and so glad that Openreach are seeing people leaving their network.
FANNY ADAMS? anonymous by another name methinks.
With the atrocious cppp that city fibre has this is actually surprising that people love burning money this much
Two to three weeks ago, the CityFibre investors are reported to have held talks with VM02. Some claims have been made about that alleged meeting, but what if an outcome was for CityFibre to fill the investment gap arising from the build pause imposed by Telefonica’s Strategic Review on VM02’s full fibre roll-out programs?
Such an agreement has the potential to boost the merits of completing the funding agreement for CityFibre and would help to get VM02’s rollout moving again.
A buy-out of Telefonica’s share of Nexfibre would potentially be beneficial to all three parties.
I just hope this paves the way for CF to acquire APFN.
500m as a consolidation fund goes to demonstrate the low value put on other altnets. By 2020 valuation forecasts that wouldn’t have bought you a bag of sweets.
What a collosall waste of time and money. 1 fibre infrastructure, government owned with ISPs able to add their own GPON or Point to Point deployments wholesaling the fibre ala LLU for ADSL would have been much better. Having multiple (foreign) entities digging up the roads, adding to telegraph poles, duplicating fibre is slowing down the rollout and holding back the price war for nation-wide 1Gb up and down. I now have 3 competitors down my street with a 4th and 5th planned. That time and money could be spent getting access to someone else. Broadband has become a critical infrastructure and its physical infrastructure shouldn’t be in the hands of external entities, same should apply to other critical infrastructure.
CityFibre are the only FTTP infrastructure at my address, if it wasnt for them I would still be on either cable broadband or VDSL.
As to why certain areas are attracting them like a magnet, that I will agree has created a lopsided rollout, part of the problem is BDUK, gigabit vouchers etc, should never have happened until commercial rollouts had hit their end.
Like NBN in Australia? (a disaster)
Just not GPON. The newer ALTNETS much more forward thinking and deployed much better kit than dinosaur BT.
I agree we should have had a dark network country wide, owned by the government or at least a non-profit-making company, but 6that don;t always work so well, only have to look at Dŵr Cymru (Welsh Water). But it will still be better than a private company with shareholders.
But it is not going to happen, far too late for it to happen, the only way would be to split Openreach from BT and make that into a non-profit-making company, but then what do you do about the shareholders?
The problem is a lot of people’s pensions are also linked in some way to BT.
So the way things are now is about the best we can ask for at the moment, all we need is more people to use Altnets, I am trying my best to get people to change, maybe once Fullfibre/Zzoomm starts offering different providers on their network here, it will help.
Building networks costs a lot of money and I presume those investors know that and are in it for the long game, if not then they are investing ion the wrong sector.
There will be winners and there will be losers, that is life, we all take risks.
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@Ad47UK An Altnet is fine if you are lucky enough to have a decent one pass your house. I have a choice between Openreach & APFN which I can’t even order from right now even if I wanted to giving Openreach an effective monopoly. Zzoomm might be great but they’re naff all use to me.
@Big Dave, I agree if you don’t have an alt net going past your house then you can’t use them, that is logical, some people don’t have any FTTP and some have rubbish FTTC or even worse.
So yes, I am lucky, for a change to have a decent fibre Altnet set up where I live, I would still be on FTTC if they were not here as I was certainly not going to an openreach FTTP service. I would have gone for a cheaper FTTC service like Onestream as they were about £23 for FTTC, the only problem is like a lot they are 24-month contract.
I am pretty sure you would not be happy if we had one supermarket chain, that could do what they like. I know they all seem to do what they want, but just imagine if we just had one
Bad enough with one company owning the gas or one company owning the water service n one area, how has that turned out for Thames water and their customers?
Yet, people on here, still think it is a good thing to have services privatised. No doubt the ones who have shares in these companies, not done them much good over the years.
Que the naysayers, who want to kick and scream every time cf release news , newsflash cf are the fuse that gave the uk consumer choice and should be celebrated as such , cf continue disrupt and rich the incumbent world and i love it, seems some uk big players do to
Hear, hear.
That is what the head of CityFibre likes to claim, but it is not true.
What’s more, if the business is not turned around soon, the company might find that the investors will start taking matters into their own hands.
@Far2329Light – “Turned around”? What nonsense. The company exceeded their investor targets for the 2024 financial year. They are very much on track in their current business plan!
@Facts:
To put back in order. CityFibre has been blown off course by external events, so it has adjusted its business model. Further work will no doubt be needed to sustain the business, but at least the financing has been sorted.