Gigabit‎ Cities' builder to double market value in £200m deal

Member News | 06.07.2017

Gigabit‎ Cities' builder to double market value in £200m deal

A telecoms infrastructure group positioning itsel‎f as a rival to BT's Openreach division will announce on Wednesday that it is doubling its market value through an ambitious share sale.

Sky News has learnt that CityFibre, which is listed on London's junior AIM stock market, will say that it is raising up to £200m through a placing of equity with new and existing investors.

The capital-raising will be backed by Woodford Investment Management, the vehicle founded by Neil Woodford, arguably Britain's best-known fund manager.

Sources said on Tuesday that the share sale would signal an aggressive expansion by CityFibre of its fibre-to-the-home initiative across the UK.

Following a successful trial in York - where its partners included Sky plc, the owner of Sky News - construction is expected to begin in five other cities early next year.

CityFibre dubs itself as a British builder of 'gigabit cities', with one source saying that its successful expansion would position it "as a clear alternative to Openreach‎, by providing future-proof communications infrastructure to challenge the incumbent's legacy copper network".

The fundraising by CityFibre comes amid a debate about the quality of Britain's communications infrastructure and follows an agreement reached earlier this year by BT and Ofcom, the industry regulator, that will govern aspects of Openreach's ‎future management.

Openreach announced in May that it was launching a consultation on full-fibre access, and said it wanted to make ultrafast broadband available to 12 million homes and businesses by 2020.

Rivals have expressed frustration‎ with Openreach's past performance, while Greg Mesch, CityFibre's chief executive, derided the BT unit's ambitions.

‎"It is laughable that Openreach claims to be the nation's digital champion when it is responsible for the UK being stuck in the digital doldrums," he said in May.

"It has fallen to CityFibre, an independent communications infrastructure builder, to lead the charge to deliver the UK's full-fibre future - not Openreach."

CityFibre's fundraising will coincide with ‎the formal launch of a £400m Government-backed initiative this week to accelerate investment in digital infrastructure.

Andrew Jones MP, the exchequer secretary to the Treasury, announced this week that M&G Investments and Amber Infrastructure would oversee the new fund, claiming that their expertise would "unlock more than £1bn of investment" in full-fibre networks.

A meeting to discuss the plans is due to take place at the Treasury on Wednesday.

This week's fundraising will be CityFibre's most significant move since the acquisition last year of national fibre infrastructure assets from KCOM Group for £90m.

At Tuesday's closing share price, the company ‎had a market capitalisation of £160m.

The share sale is being led by Citi and Rothschild, with Finncap and Liberum also involved.

A CityFibre spokesman declined to comment

Source: Sky News 

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