When Jeremy Corbyn last year announced that the Labour party would nationalise Openreach if they were to win the UK’s general election, the nation’s telecoms industry took a sharp intake of breath. Discussions throughout the industry were put on hold, as the key players, big and small, waited for the political dust to settle.
When Jeremy Corbyn last year announced that the Labour party would nationalise
Openreach if they were to win the UK’s general election, the nation’s telecoms industry took a sharp intake of breath. Discussions throughout the industry were put on hold, as the key players, big and small, waited for the political dust to settle.
CityFibre’s long-discussed purchase of FibreNation from TalkTalk was one such deal, put on ice until the political situation was resolved. Now, after the Conservative election victory last year, the £200 million acquisition has finally reached its conclusion and is now waiting shareholder approval.
FibreNation owns a full fibre network in York that has been expanded to nearby towns including Harrogate and Dewsbury. It has plans to increase full fibre availability for up to three million homes and businesses, but TalkTalk has been struggling for some time to find suitable investors for this goal.
CityFibre, it seems, has no such qualms. The company’s existing deal with Vodafone plans to build FTTH connections to five million UK residencies by 2025, and FibreNation’s acquisition has seen them increase their target to eight million.
Achieving this new target will be no small feat, and it suggests that the rumoured investment
of £1.5 billion from CityFibre’s Goldman Sachs investors last year will be going ahead. This would raise the total investment to £4 billion.
The departing TalkTalk has signed a wholesale agreement to become an anchor tenant for the network, putting the question of Vodafone’s exclusive access clauses to CityFibre’s networks to bed. Sky Broadband were also a partner of FibreNation, so they will presumably also have access – at least for now – under the terms of their previous arrangement.
For TalkTalk, the sale of FibreNation will go some way to reducing its debt.
The rapid upscaling of CityFibre’s plans are beginning to make it a serious contender against established rivals BT and Virgin Media.
“The UK is a service-based economy, and this runs best on full fibre," said Greg Mensch (pictured), chief executive of CityFibre. "Ensuring national coverage is critical and this can only be achieved by driving infrastructure competition at scale. This deal demonstrates the appetite from industry to see it established.”
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