CityFibre set to be bought by Goldman Sachs-backed consortium in £538 million deal

24 April 2018 | James Pearce

UK-based telecoms firm CityFibre is the subject of a £538 million takeover bid from a consortium of infrastructure funds backed by Goldman Sachs.

The bid was made by Antin Infrastructure Fund and West Street Infrastructure Funds and has already been accepted by two-thirds of CityFibre shareholders.

The company, which offers local wholesale fibre, has recommended the offer to shareholders, saying it will help the firm achieve its ambition of deploying full-fibre to 20% of the UK population and offer an alternative to BT’s Openreach.

“Under private ownership, CityFibre will be able to gain alternative and potentially easier access to the financing required for its announced FTTH (fibre-to-the-home) deployment,” said Chris Stone, chairman of CityFibre.

CityFibre was listed in 2014 and signed a partnership last year with Vodafone which sees the mobile operator offer its ultrafast broadband services across 12 UK towns and cities.

Invesco Perpetual, which holds a 20.1% stake in the company, Woodford (19.1%) and Jupiter (7.5%) have all agreed to sell to the consortium. It is the second time Woodford has offloaded its stake in a UK altnet in the last few months, after Infracapital, the infrastructure arm of M&G Prudential, bought rural fibre provider Gigaclear.

vodafone and cityfibre

It comes as Vodafone and CityFibre announced an expansion of its full-fibre service to four more cities across England and Scotland, adding Coventry, Edinburgh, Huddersfield and Stirling to its Gigafast broadband programme.

The ultrafast service is already being rolled out in Aberdeen, Milton Keynes and Peterborough, with Cityfibre already committing up to £315 million to bring full-fibre to at least one million homes and small businesses.

“Behind each city project announced today lie concrete plans, advanced network designs, and the resources to mobilise construction,” said CityFibre’s Mesch.

“We also have a significant head-start, harnessing our existing, extensive duct infrastructure that is tailor-made for city-wide FTTP expansion.”

“I’m delighted to welcome everyone living in Coventry, Edinburgh, Huddersfield and Stirling to the full-fibre club, with a broadband service like no other,” said Vodafone UK chief executive Nick Jeffery. “After five months, we are well on track with the joint Gigafast broadband programme that will help position the UK as a world-leading digital centre.”