Thursday, 19 October 2017

Gigaclear to float on AIM

Gigaclear
Monday 15 September 14

Gigaclear plc, the provider of ultrafast fibre-to-the-premises networks to rural communities, today announces its intention to place new ordinary shares with institutional investors (the "Placing") and to apply for the admission of its entire issued share capital to trading on AIM, the market of that name operated by London Stock Exchange plc (“Admission”). In addition, the Company is proposing to make an offer to qualifying customers and existing shareholders to subscribe for new ordinary shares in the Company (the “Customer and Shareholder Offer”, together with the Placing, the “Issues”). Dealings in the Company’s ordinary shares on AIM are expected to commence in October 2014. Oriel Securities Limited ("…

Gigaclear plc, the provider of ultrafast fibre-to-the-premises networks to rural communities, today announces its intention to place new ordinary shares with institutional investors (the "Placing") and to apply for the admission of its entire issued share capital to trading on AIM, the market of that name operated by London Stock Exchange plc (“Admission”). In addition, the Company is proposing to make an offer to qualifying customers and existing shareholders to subscribe for new ordinary shares in the Company (the “Customer and Shareholder Offer”, together with the Placing, the “Issues”). Dealings in the Company’s ordinary shares on AIM are expected to commence in October 2014.

Oriel Securities Limited ("Oriel Securities") is acting as Nominated Advisor and sole broker to the Company in relation to Admission. The Company’s financial adviser is Cameron Barney LLP.

Highlights

· Gigaclear is an established provider of fibre-to-the-premises (“FTTP”) networks to rural communities. There is strong existing demand for faster broadband from a large, under-served rural population. Gigaclear’s networks, which are built with new gigabit fibre optic cable, provide significantly higher speeds to these rural communities than are available with existing internet delivery technologies and in many instances significantly faster than average urban speeds.

· The Directors estimate that of the nine million premises (c.32 per cent. of UK properties) currently without access to superfast broadband, one and a half million are suitable for network build out based on Gigaclear’s geographic and demographic criteria. In addition to directly targeting these communities, many have approached Gigaclear using their own initiative to find a solution to their requirement for improved internet access.

· Gigaclear’s network build out is focused on areas where there is no availability of FTTP and where the main alternative is an existing ADSL copper-based network. Other technologies (fibre-to-the-cabinet (“FTTC”), 3G/4G, WiFi or satellite dishes) are inferior for speed and reliability and often do not represent attractive long-term solutions.

· Gigaclear currently operates nine FTTP networks and has five more networks that are under construction and are expected to be completed within Q4 2014. The Group’s business plan envisages the deployment of capital over the medium term to construct networks serving up to 200,000 homes, which equates to 13 per cent. of its addressable market.

· Gigaclear sells directly and also through third parties to domestic and business users, charging them for the initial connection as well as billing a monthly charge. Depending on the tariff chosen, Gigaclear offers symmetric speeds of between 50 Mbps and 1 Gbps, with an additional option for high volume users of up to 10 Gbps. The Company’s basic 50 Mbps tariff is broadly comparable in price to the cost of premium superfast services from other providers, but is deployed in areas where those other services are not generally available.

· To reduce the risk of investment, Gigaclear builds community by community and, prior to commencing network construction, the Company requires a minimum level of customer pre-orders in the community that provides a day one project return of over 10 per cent.. Historically this has equated to 25 to 35 per cent. of the households in the community. Customer engagement in built networks, post pre-marketing, is high with take-up growing steadily (leading to current penetration by community of 26 to 65 per cent.) and customer losses of less than one per cent. per annum. The Directors believe that, once FTTP infrastructure is deployed, it is likely to be economically unattractive for other operators to overbuild an equivalent network.

· The Group’s Board and senior management team has a strong track record in the telecommunications and technology sectors and have successfully founded, built and run other businesses providing internet and data services in the UK.

· In June 2014, Gigaclear secured a £5 million equity investment from Woodford Investment Management, which provided important institutional investor endorsement of the Group’s business and potential. This has also provided the Company with the finance to accelerate roll-out, including initiating pre-marketing in 11 communities.

· The Directors believe that the Issues and Admission will enable the Group to pursue its growth strategy more quickly and more effectively. Gigaclear intends to use the net proceeds of the Issues to fund the roll-out of FTTP networks to new communities, to increase its marketing capabilities to drive customer awareness and uptake and to fund associated overhead.

Matthew Hare, Chief Executive of Gigaclear commented:

“Fast broadband and its associated benefits are enjoyed by many households in Britain’s towns and cities. At the same time, however, there are a significant number of households in rural communities that are effectively cut off from the broadband revolution. Our opportunity lies in bridging that divide, building ultrafast, pure fibre networks for rural communities that can not only rival urban speeds but can often beat them, hands down.”

“Gigaclear is well positioned to take advantage of the increasing trend for faster broadband to be made available to rural communities and there is no stronger indicator of this than the fact that over 400 UK communities have approached us directly for our service. The Group’s proposed Issues and Admission to AIM will enable us to more quickly roll-out new networks and places us in a very strong position to deliver on our plan to serve up to 200,000 homes over the coming years.”


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