Broadband giant CityFibre to sell stake to new investor

Mar 08, 2021

The owners of CityFibre Holdings, the telecoms infrastructure company, are to raise hundreds of millions of pounds from the sale of a stake to a new shareholder to aid their delivery of a £4bn investment programme.

Sky News has learnt that CityFibre has appointed the investment banks UBS and Rothschild to identify a third investor to join Goldman Sachs-backed West Street Infrastructure Fund, and Antin Infrastructure Fund.

The process, which is expected to take several months, will formally get under way this week, according to industry sources.

Insiders said CityFibre was likely to sell a substantial minority stake, which would enable it to receive a capital injection potentially worth many hundreds of millions of pounds.

In a statement on Monday, a CityFibre spokesman said: “We can confirm that we’re exploring a possible expansion of our shareholder base to support the acceleration of our build and possible participation in the BDUK [Building Digital UK] rural programme.”

CityFibre, which last year bought the infrastructure arm of TalkTalk, has pledged to invest up to £4bn to deploy a full-fibre network that would reach up to eight million premises by 2025.

Such a programme would make the company the largest independent full-fibre platform in the country, and second only to Openreach, which operates at arm’s length from its parent company, BT Group.

The company says that once completed, its network will serve approximately 800,000 businesses, 400,000 public sector sites and 250,000 5G access points.

CityFibre is either building or mobilised in 67 towns and cities, with more than half a million homes now ready for services.

The company has agreements with Vodafone, TalkTalk, Zen and a growing number of other internet services providers across the country to sell services over its networks.

A CityFibre insider said it was now “building at pace due to the favourable regulatory environment developed by [industry regulator] Ofcom for competitive infrastructure investment”.

The company is run by Greg Mesch, its chief executive, and chaired by Steve Holliday, the former National Grid boss.

Last June, it indicated that it would create 11,000 jobs over the next three years to deliver its expansion plan.

A string of smaller players, including Hyperoptic and Gigaclear, have also been set up in recent years to deliver full-fibre connections, prompting analysts to question how many of the new companies are likely to be financially successful.

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