CityFibre completes £200mn FibreNation acquisition

With TalkTalk shareholders approving the sale of FibreNation to CityFibre for £200 million, the wholesale infrastructure challenger has increased its rollout target to 8 million premises.

With an existing FibreNation network in York, construction projects underway in Harrogate and Dewsbury, as well as plans slated for Bolton, CityFibre has now set its sights on 62 towns and cities outside of London for fibre. The rollout of services to 8 million premises will eventually span to 100 towns and cities, as CityFibre continues its mission to be a scaled and nationwide competitor to Openreach in the wholesale segment.

“In the face of the rapid spread of the Coronavirus and its unprecedented impact on the UK’s society and economy, we believe that the need for world-class digital infrastructure has never been greater,” said CityFibre CEO Greg Mesch.

“Completing our acquisition of FibreNation marks an acceleration in our ability to deploy the critical future-proof digital infrastructure our country needs. By significantly expanding our rollout ambition to up to 8 million premises, CityFibre is helping to answer the call for a full fibre Britain.”

What this means for TalkTalk remains to be seen, though it appears its mission to challenge the ISP market by both owning the infrastructure and the relationship with the customer is drawing to a close. Sceptics might suggest this transaction is a sign of a struggling business, as a result of the lower-cost fibre services and the vast expense of deploying full-fibre networks, weighing heavily on the spreadsheets.

“The sale of FibreNation to CityFibre, in combination with a competitive wholesale agreement, enables us to continue our strategy to accelerate TalkTalk’s fibre growth for our residential and business customers, thereby delivering a superior customer experience at an affordable price,” said TalkTalk CEO Tristia Harrison.

This is of course another step forward for CityFibre. This is a company which is cash rich, thanks to it being acquired by a Goldman Sachs owned fund, allowing for aggressive construction of full-fibre networks, though acquisition is in the heritage of this business. Let’s not forget, CityFibre exists thanks to the acquisition and integration of distressed fibre businesses (H2O Networks, Fibrecity Holdings and Opencity Media, for example) in 2011.

On the construction front, CityFibre has been given the greenlight to continue its ambitious rollout from the UK Government. Prime Minister Boris Johnson has paid particular attention to the progress being made in the broadband segment, and recently requested deployment should continue during the outbreak as it will allow both society and the economy to function and to enable rapid economic recovery when the crisis is over.