BT rival CityFibre buys Kcom's national fibre network

14 December 2015 | Alan Burkitt-Gray


CityFibre, a company building fibre networks in a number of UK cities, has bought Kcom’s UK-wide network infrastructure for £90 million.

The sale leaves Kcom with just its core infrastructure, the local telephone network in the English city of Hull and the surrounding district. 

Listed company CityFibre has secured £180 million in finance to buy the network and use it to expand its metro footprints to 36 cities and aim towards its target of 50 by 2020. 

It will then reach 20% of the UK market, says CityFibre, which has a joint venture with two other rival operators, TalkTalk and Sky, to build ultra-fast fibre to the home networks. 

CityFibre CEO Greg Mesch said: “This is the most significant event to take place in the UK’s digital infrastructure market in a decade. The UK now has a secure independent infrastructure alternative. Cities, service providers, mobile operators and investors have boldly embraced a new model of future-proof infrastructure provision and paved the way for its acceleration across the country.”

Kcom CEO Bill Halbert said that it was selling “an under-utilised asset, built more than ten years ago and which is no longer core to our strategy”. Kcom — then Kingston Communications — built its UK network from the late 1990s when it set up a national subsidiary, Torch Communications. The company over-expanded and reversed its strategy. 

Halbert said: “Over the first half of the financial year, there were encouraging signs that our business transformation is starting to deliver results and the proceeds from this transaction offer us the opportunity to accelerate investment in those plans, without the need for any material increase in our indebtedness.”

CityFibre’s financing comprises £80 million of new equity and £100 million in debt facilities, and the deals are expected to complete in mid-January 2016.

The acquisition will extend CityFibre’s UK footprint by more than 300%. The physical infrastructure assets comprise 1,100 kilometres of duct and fibre network in 24 UK cities, as well as 1,100 kilometres of national long distance network that connects these cities to data-centres across the UK and to internet peering points in London.

The expanded footprint will reach more than 7,000 mobile cell sites, 24,500 public sector sites and 245,000 businesses.