Soaring demand for high-speed connectivity has strained the capacities of broadband providers and mobile operators. This has pushed more and more to CityFibre Infrastructure (CITY), which builds and rents out access to fibre optic infrastructure in urban areas. Brisk trading narrowed the group's operating loss by 17 per cent to £6.2m in 2015. But the real triumph for investors was its £90m purchase of network assets from KCom (KCOM) in January, which more than doubled the size of its network. Management said this move had accelerated its expansion by at least five years.
CityFibre won city-wide construction projects in Newport, Edinburgh and Glasgow in the period. It also signed up Vodafone and other service providers, increasing its partner count from 25 to 41. The upshot was that it signed over £23m in contracts - more than double the figure for 2014.
Following the KCom deal, CityFibre's network reaches 260,000 businesses and 3.7m homes across 37 towns and cities. Its greater scale has already led to a £3.2m project to connect 120 public sector sites in Southend-on-Sea, as well as a £2.3m deal with SSE to provide network capacity between Reading and Slough.
Management expects to turn a cash profit this year. Broker finnCap forecasts an adjusted pre-tax loss of £12.5m in 2016, giving a loss per share of 4.5p (losses of £4.9m and 4p in 2015).
CITYFIBRE INFRASTRUCTURE (CITY) | ||||
---|---|---|---|---|
ORD PRICE: | 59p | MARKET VALUE: | £155m | |
TOUCH: | 58-59p | 12-MONTH HIGH: | 78p | LOW: 44p |
DIVIDEND YIELD: | nil | PE RATIO: | na | |
NET ASSET VALUE: | 16p | NET CASH: | £9.7m |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (£) | Dividend per share (p) |
---|---|---|---|---|
2011 | 1.0 | 10.8 | na | nil |
2012 | 1.7 | -6.5 | na | nil |
2013 | 1.9 | -6.3 | na | nil |
2014† | 3.8 | -7.1 | -0.09 | nil |
2015 | 6.4 | -6.4 | -0.06 | nil |
% change | +67 | - | - | - |
†CityFibre listed in January 2014 |