CityFibre attempts to break away from Vodafone deal

CityFibre attempts to break £500m Vodafone deal

26 November 2019 | Natalie Bannerman

Cover

CityFibre is attempting to restructure its exclusive partnership agreement with that gives Vodafone exclusive rights to sell broadband on its first million full-fibre lines.

Capacity first reported on the £500 million plus gigabit fibre network deal back in 2017, at the time both parties said that the deal would deliver gigabit fibre broadband to up to five million homes and businesses by the year 2025.

According to reports by the Telegraph, the once highly praised deal is putting CityFibre at risk of losing out on lucrative contracts due to the exclusivity clause and is now asking for concessions from Vodafone.

Back in 2017, Nick Jeffery, CEO of Vodafone UK said that the period of exclusivity is likely to last ‘up to about 3 years”. At the time, Greg Mesch, CEO of CityFibre said that once that period was over the network would be open to all.

In exchange for letting TalkTalk and Sky have use of the full-fibre lines, Vodafone is also due to get improved commercial terms, said two industry sources to the Telegraph. Vodafone thinks that by allowing rival companies share the infrastructure early on will help CityFibre become viable competition to Openreach that has already surpassed two million homes.

The talks between both Vodafone and CityFibre are said to be fairly advanced, and for CityFibre’s part comes part of the company’s plans to acquire TalkTalk subsidiary FibreNation for £200 million. FibreNation has already built a full-fibre network in York and under the terms of the deal, should it go through, FibreNation is to migrate its 4.3 million off the Openreach network and onto the new lines it is building across the UK.

The deal came to a halt when Labour unveiled its plans to nationalise Openreach in order to deliver free broadband to everyone. It’s it likely for further development to occur once the election is completed.

The news comes as the start of this month, Vodafone entered into a new commercial deal with Openreach to expand its Gigafast broadband roll out. From spring 2020, Vodafone will make its Gigafast Broadband available to customers in Birmingham, Bristol and Liverpool on the Fibre-to-the-Premises (FTTP) network that Openreach is building. The agreement includes the option for further phases that could extend coverage to other places.