Vodafone throws money at CityFibre to teach Openreach a lesson

UK operator Vodafone has reminded Openreach that it’s not the only fibre game in town by funding CityFibre’s network expansion in return for consumer broadband exclusivity.

The move is part of a long-term strategic partnership between the two that claims it will bring FTTP to 5 million homes by 2025. The network will be built and owned by CityFibre but Vodafone’s cash injection ensures a period of wholesale exclusivity. The first phase targets a million premises by 2021, with the locations yet to be announced.

The rest of the announcement is essentially the standard FTTH propaganda talking up what a big deal fibre is compared to copper and how shocking it is that the UK (i.e. Openreach) hasn’t got it together to fibre-up the whole country yet. ‘If you want something done properly, do it yourself,’ is the rather sanctimonious undertone of the announcement.

“The UK has fallen far behind the rest of the world, trapped by the limited choice available on legacy networks,” said Vodafone UK Chief Executive Nick Jeffery. “We look forward to working with CityFibre to build the Gigabit fibre network that the UK needs and deserves.”

“This agreement will unlock the UK’s full fibre future and is a major step forward in delivering our vision for a Gigabit Britain,” said CityFibre boss Greg Mensch. “With this commitment from Vodafone, we have a partner with whom we can transform the digital capabilities of millions of homes and businesses and establish an unassailable wholesale infrastructure position across 20% of the UK broadband market.”

CityFibre’s share price had jumped 27% to 55p on the news but it had been as high as 70p only a few months ago so that may not be too significant. One of the main reasons for this volatility has been concerns about how it would fund its fibre roll-out plans and this Faustian pact with Vodafone seems to have reassured investors a bit.