CityFibre completes Lit Fibre buyout

Lit describes itself as a ‘vertically integrated’ altnet, in that it comprises a network builder and Internet Service Provider (ISP). It has a current footprint of over 220,000 premises across more than 20 towns in Wiltshire, Gloucestershire, Hertfordshire, Worcestershire, Essex and Suffolk, and serves a subscriber base of around 10,000 retail customers.

CityFibre intends to complete Lit’s work-in-progress deployment as well as the majority of its planned network rollouts. In total, the network is expected to reach up to 300,000 premises by early 2025, which will top up CityFibre’s nationwide target of 8 million premises.

The existing owner, a New York-based investment firm called Newlight Partners, will join as a minority shareholder. No figures were mentioned in the release, but sources cited in an earlier report by Sky News claimed that the equity firm's stake equates to roughly 2%, which based on CityFibre's valuation of £4 billion, values Lit Fibre at around £80 million.

CityFibre has begun the integration of Lit’s 10Gbps XGS-PON network infrastructure into its carrier-grade network. The integration will be completed later this year, enabling CityFibre’s ISP partners to access the same products across the extended footprint.

“We’re delighted to have concluded our acquisition and we’d like to welcome everyone at Lit to the CityFibre team,” said Greg Mesch, Chief Executive Officer at CityFibre. “We’re also pleased to welcome Newlight Partners, with their deep understanding of the fibre infrastructure market, as our newest CityFibre shareholders.

“We’ve already been working hard with the great team at Lit to ensure that its network is integrated quickly as our partners are excited to begin marketing over the new footprint. This is a great opportunity for us to hone our integration capabilities as acquisition becomes an increasing accelerant to our 8m plan.”

Joshua Ho-Walker, Partner at Newlight Partners added: “We are excited to be CityFibre’s newest shareholder and we look forward to helping bring CityFibre’s market-leading, full-fibre platform to 8m homes in the UK. This acquisition is important recognition for the high-quality business that Lit Fibre built and we are grateful for the Lit Fibre team’s hard work and dedication over the past few years.”

The purchase of Lit is the first of several deals CityFibre expects to close over the next two years, we’re told, in line with its stated goal to pursue altnet acquisitions as a path towards ‘and potentially beyond’ its 8 million premises target.

Consolidation in the UK altenet space has been expected due in part due to the huge number of regional players that have emerged in the last few years, and subsequent overbuild. This can hurt ROI for those engaging in the expensive work of laying cable only to find the potential market base in some areas flush with choice for providers. It seems this market dynamic may present more acquisition opportunities for CityFibre in the near future.