Takeover offer values CityFibre at £538m

It is the latest sign that funds are targeting the gap in the UK’s fibre infrastructure market which, historically, has been dominated by BT’s (BT.A) Openreach. Already this year Infracapital, the infrastructure arm of Prudential, has pledged to acquire rural fibre specialist Gigaclear and joined up with TalkTalk (TALK) to roll out a new fibre network. Elsewhere small players, including Truespeed and Community Fibre, have been backed by large infrastructure funds.

CityFibre has long been praised for its strong capability in rolling out and running fibre-optic cables carrying super-fast broadband all the way to the home. Indeed in 2017, 357km of fibre was laid to build the group’s network up to 3,740km, while net connections increased by 26 per cent compared with the prior year, and a number of new public sector contracts were added.

But the group has struggled in the past with the costs required to develop a sizeable network, which is why it was forced to tap investors for £200m of cash last July. According to experts at technology analysis and advisory firm Tech Market View, the Antin/WSIP deal looks sure to strengthen CityFibre’s ability to take on its larger rivals. Bad news for incumbent BT and for TalkTalk, which is hoping to roll out its own full-fibre network, backed by Infracapital.

Meanwhile, it’s full steam ahead for City’s partnership with Vodafone (VOD). Construction work has started in Milton Keynes, the first of the 12 secondary cities in the UK to benefit from the venture’s new fibre-optic cables, six others have been identified as the next areas of investment. Vodafone has committed to lease the lines from CityFibre once they are up and running, in exchange for a period of exclusivity, in a deal expected to be worth £500m over the first 20 years.