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CityFibre to connect 8m UK homes after £4.9bn debt raising

Greg Mesch CityFibre.jpg

UK operator CityFibre has enough money to connect eight million homes to fibre, the company said after raising £4.9 billion debt.

Some of the money comes from the UK Infrastructure Bank, a government-backed institution set up in 2021 to back the UK’s national infrastructure strategy.

This £200 million will be used to connect rural homes, said the bank, which described itself as “a cornerstone lender” in CityFibre’s fundraising.

John Flint, CEO of the UK Infrastructure Bank, said: “We are pleased to act as a cornerstone investor in what will be the largest digital debt transaction in the UK market to date, connecting a third of UK households with fast and reliable broadband throughout England and Scotland.”

CityFibre CEO Greg Mesch (pictured) said: “With our rollout now fully financed, backed by so many esteemed financial institutions, we have emerged as a strong national challenger.”

According to its network availability map, CityFibre is focusing on second-tier and smaller cities in England and Scotland, but not Wales or Northern Ireland. It has not announced plans for London, Birmingham or Manchester, the three largest English cities. It is, however, building in Edinburgh and Glasgow, the two largest Scottish cities.

The main lenders are NatWest, Société Générale, Crédit Agricole CIB, BBVA, Intesa Sanpaolo, ING and SEB.

The money – committed facilities of £3.9 billion plus a reserve, described as “an accordion facility” of £1 billion – will be used to fund CityFibre’s rollout to a third of the UK market by 2025.

The UK’s Office for National Statistics puts the number of households at 27.8 million in 2020, so 8 million is actually less than a third.

This week BT-owned Openreach repeated its statement that it was planning to connect 8 million homes to fibre by 2025.

The financing follows £1.125 billion in equity investments that CityFibre arranged in September 2021 from two new investors, Mubadala and Interogo Holding. as well as from existing investors Antin Infrastructure Partners and the Goldman Sachs infrastructure business.

The operator said: “Combined, these debt and equity funds will fully finance the completion of CityFibre’s rollout to eight million homes, 800,000 businesses, 400,000 public sector sites and 250,000 5G access points.”

CityFibre added: “They will also establish the UK’s first large-scale, carrier-neutral full fibre infrastructure platform, providing internet service providers (ISPs) and mobile operators with access to the nation’s most advanced fixed-line network and unleashing over £38 billion in economic benefits to help level up the UK.”

Mesch said: “CityFibre’s aim is not simply to challenge. It’s to be better. It’s to establish ourselves as the preferred network wherever we build, bringing higher-quality, more affordable infrastructure within reach of millions and unleashing the transformative economic potential of full fibre to help level up the UK. We have never been more confident that we will succeed.”

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