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UAE funding to propel £1.1bn UK broadband push by CityFibre

September 18, 2021
finance & economy

UK's third largest full fibre broadband company aims to reach eight million homes by 2025

It is a decade since full fibre broadband provider CityFibre began its vision to create gigabit cities across the UK.

From smaller projects in southern town Milton Keynes and the historic northern city of York, the London-based company now has networks in more than 60 towns and cities.

Full fibre networks run fibre optic connections directly from an exchange to the home, allowing much faster transmission speeds.

It has attracted millions of pounds of investment and is now at the forefront of the UK government’s pledge to “level up” – to increase prosperity in poorer regions – by ensuring every home has fast broadband by 2025.

As it marks its 10th anniversary, Goldman Sachs-backed CityFibre, the brainchild of broadband guru Greg Mesch, is now the UK’s third largest national digital infrastructure platform, behind long-established companies BT and Virgin Media.

On Thursday it unveiled a £1.1 billion ($1.51bn) war chest to take on the industry giants.

Abu Dhabi’s Mubadala Investment Company, one of the world’s leading sovereign investors, and Interogo Holding, an investment group, joined the new £1.1bn funding boost to the firm.

The financing, which is the largest capital raise yet dedicated to full fibre deployment in the UK, will support and accelerate CityFibre’s rollout to a third of the UK market by 2025.

“We’re thrilled to announce the completion of a £1.125bn capital raise, the largest ever secured to support the UK’s full fibre future,” said Mr Mesch, chief executive of CityFibre.

“We also take great pleasure in welcoming Mubadala and Interogo Holding as new investors in this important project. This investment is a real cornerstone and it’s just incredible.

“This capital raise is proof of the benefits of a truly competitive infrastructure market, as envisaged by both government and [UK communications regulator] Ofcom.

“If nurtured and protected, infrastructure competition at scale will continue to unleash huge investment from the private sector, as well as catalyse investment from incumbent operators.

“Ultimately though, it is residents, businesses and the UK economy that stand to benefit, with competition driving what has become the fastest roll-out of full fibre in Europe,” Mr Mesch said.

Presently, the company – which is jointly controlled by Antin Infrastructure Partners and Goldman Sachs’ West Street Infrastructure Partners – provides broadband to 650,000 UK homes and is aiming to hit a million by the end of the year.

“By 2025, our world-class digital infrastructure will be within reach of nearly a third of the UK market, connecting homes, businesses, schools and hospitals, and supporting 5G mobile networks.

“This is clear proof of the benefits of digital infrastructure competition,” Mr Mesch said.

“We have seen huge enthusiasm and early success from our partners, both large and small. Together we’re maximising the potential of a new infrastructure build programme to stimulate demand and drive take-up.

'Building the network is the first step.

“It’s only through the use of this world-class full fibre infrastructure that we can derive the maximum benefit for our economic recovery and future success,” Mr Mesch said.

CityFibre’s rise has been helped by the UK government’s ambition to boost the economy through super-fast broadband access.

Its attraction is offering superfast broadband directly to homes and businesses, instead of using fast fibre to a street’s exchange and then switching to slower copper cabling when delivering it to properties.

At present, full fibre broadband is available in only 14 per cent of UK homes, compared with 80 per cent in countries such as Japan.

CityFibre now has network rollouts under way that will lead to eight million homes, 800,000 businesses, 400,000 public sector sites and 250,000 5G mobile sites given access to full fibre by 2025.

Its journey to become a UK leader in broadband has been a challenge, Mr Mesch told The National.

“I had a vision 10 years ago we could be the UK’s third network infrastructure, but I never knew if it would work,” he said.

“The first five years were really hard, no one believed in us. Nobody believed we could challenge BT’s dominance.

“It’s like knowing there is a prom but not knowing if you’ll get asked,” Mr Mesch said.

“We started small and showed we could do it, and after five years we finally got some momentum.

“I had a dream the UK needed a third national network and 10 years on I’m being invited to the prime minster’s office and I’m at the prom.”

Mr Mesch said the firm now has its sights on taking more of the market.

“We are on track to get 33 per cent of the UK market now, I think we can get to 50 per cent and there is no reason why we can’t aim for 100 per cent,” he said.

“We are the Tesla of the market – we are green and fast and a challenge and BT and Virgin will now have to perform better as a result.”

The firm's £4bn rollouts are taking place in almost 300 locations and will cover 30 per cent of the population from Peterborough in eastern England to Stirling in central Scotland – 540 kilometres away – creating more than 10,000 jobs.

These new rollouts will reach in excess of three million homes and represent more than £1.5bn in private investment,” the company said.

“This brings CityFibre’s total committed build programme to approximately £4bn, making it the largest independent investment in the UK’s digital infrastructure for a generation.”

The company, which designs, builds, owns and operates the networks in urban areas, is now the UK’s leading independent provider of full fibre broadband.

Since it was founded in 2011, it has raised more than £1.6bn in capital, completed six acquisitions and is building across 285 named locations.

Its founders, Mr Mesch and Mark Collins, started the firm through the acquisition of a portfolio of existing fibre network assets in more than 50 towns and cities across the UK, which included York and Bournemouth.

It now controls more than 543km of fibre networks and manages more than 200 private and public sector contracts.

Mr Mesch has more than 35 years of experience in the sector, having founded and helped grow established fibre companies in five European countries – including Ireland’s Esat Telecom – which sold to BT for more than £1bn.

He then ran Versatel Telecom NV, which established one of the largest fibre-based infrastructures in the Netherlands, Belgium and Germany. It sold for more than €2bn ($2.35bn) in 2002.

This year he was awarded the Charles Kao Lifetime Achievement Award by the Fibre to the Home Council, a trade association in the Americas, for his contribution worldwide to broadband development.

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