A group of investors including Abu Dhabi’s sovereign wealth fund is said to be close to taking a stake in Cityfibre in a deal valuing the Goldman Sachs-backed broadband firm at around £2bn.
Abu Dhabi’s Mubadala Investment Company and Interogo Holding — the investment arm of the group behind Ikea — are leading the swoop on the so-called “alt-net” firm.
Cityfibre is expected to raise £500m from the stake sale, the Wall Street Journal reported, citing people familiar with the matter.
The company also plans to issue new debt as part of the deal, giving it a total of around £1bn in new money to fund its network rollout.
Cityfibre is one of a number of challenger broadband firms hoping to cash in on the rollout of new full-fibre networks and challenge the dominance of BT’s Openreach and Virgin Media.
Reports of the potential investment sent shares in BT down on Monday. They fell a further 0.9 per cent in early trading today.
Cityfibre is the largest of the challenger firms in the UK, ahead of rivals including Hyperoptic and Gigaclear. Its network has now reached 60 towns and cities across the country, with plans to cover up to 8m homes.
Its network is used by Vodafone to offer high-speed broadband services and by Three to support its 5G mobile services.
The new investment is expected to support Cityfibre’s existing aim to invest £4bn to expand its services to another 216 towns and villages by 2025.
But incumbents BT and Virgin Media — which recently merged with O2 — have both recently hiked their rollout targets amid growing competition in the sector.