CityFibre plans to invest up to £500m in UK fiber rollout

UK infrastructure provider CityFibre Holdings Ltd. has announced an aggressive expansion strategy, saying that it plans to connect 50,000 businesses and 1 million homes across the UK with gigabit-per-second capable networks.

The firm has appointed investment bank Macquarie Capital to advise it on raising new capital – up to £500 million ($800 million) could be needed to get the job done. CityFibre says it selected Macquarie Capital for its extensive international advisory experience in large-scale telecoms infrastructure, including its role as financial advisor to Telstra on Australia’s National Broadband Network (NBN) project, the world’s largest FTTP deployment.

Greg Mesch, CityFibre’s CEO commented, “I am delighted to be working with such an experienced financial institution. Macquarie’s deep knowledge of financing infrastructure projects is coupled with a strong and experienced telecoms banking team that will be a great asset to ensure we achieve our goal of accelerating fiber-optic network deployment throughout the UK.”

Sound investment credentials are crucial as CityFibre tries to distance itself from a difficult history.

CityFibre was established in January 2011 when Mesch purchased the assets of i3 Group’s UK operations, which included FibreCity Holdings, H2O Networks, and OpenCity Media.

H2O Networks had run into problems following the collapse of Total Asset Finance, one of the major funding providers for its FTTP rollout in Bournemouth and Dundee. In October 2010, construction work came to an abrupt halt in both cities.

Following a restructuring of the business and finances, CityFibre was ready to breathe new life into the assets it had purchased. According to the company, it inherited “over 130 contracts with public sector bodies including local authorities, universities and businesses” as well as FTTP connections to around 20,000 homes in Bournemouth. It also picked up memorandums of understanding with a number of “second tier” cities around the UK to build out FTTP networks – around 1 million homes in total.

Since April the company has completed a metro fiber ring to date in the city of York connecting over 100 sites, as well as projects in Dundee (see "CityFibre connects Dundee Waterfront Project") and Ayr. And it has begun reinstating the FTTP network in Bournemouth; around 24,000 homes are expected to be ready for service by the end of the year. CityFibre plans to pass all the remaining homes in Bournemouth by mid-2013.

CityFibre won’t supply retail services directly to consumers on its FTTP network, but instead plans to bring in third-party Internet service providers.

If everything goes according to plan, CityFibre will become a significant supplier of FTTP infrastructure in the UK, competing with the established players. BT Openreach is investing £2.5 billion on FTTx to reach two-thirds of the country, although only one-quarter of those – or roughly 4 million homes – will receive FTTP under current plans (see “BT launches FTTP service, promises 300 Mbps next year”). Fujitsu has also announced plans to bring FTTP to 5 million rural homes, but those plans are contingent on access to BT’s ducts and poles (see “Fujitsu unveils UK FTTH network plans”).

For more information on FTTx/access systems and suppliers, visit the Lightwave Buyer’s Guide.