Talktalk sells broadband business to Cityfibre for £200m
Broadband provider Cityfibre this morning announced the acquisition of Fibrenation, Talktalk’s fibre networks rollout business, for £200m.
The deal, which was delayed in November after Labour announced plans to nationalise BT, means that Cityfibre’s rollout target has risen from 5m up to 8m premises in the UK.
As a result of the purchase, Talktalk, which was advised by asset managers Lazard, will become a customer of Cityfibre’s £4bn investment programme across both consumer and business markets.
The deal makes the alternative supplier the UK’s third largest digital infrastructure platform.
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Talktalk entered discussions with various firms about the purchase of Fibrenation following the election, but has chosen to press on with the deal with Cityfibre, which is part-owned by Wall Street giant Goldman Sachs.
Fibrenation was founded in 2018, four years after a joint venture between Talktalk, Sky and Cityfibre was launched to deploy full fibre infrastructure and services across the City of York.
Fibrenation operates and continues to expand this network, where approximately 49,000 premises currently access gigabit speed broadband services from Talktalk.
Greg Mesch, the firm’s chief executive, told City A.M. that the deal was “completely synergistic” for Cityfibre, as it would bring the company’s offering to new cities.
He added that the company was targeting 100 towns and cities across the UK in a bid to bring full fibre broadband to the whole country by expanding from large metropolitan areas into smaller population areas.
He added: “Customers are not just getting BT and Virgin’s offering, but something far superior. Fibrenation has been selling gigabit speeds at wholesale prices in York. We can do this across all 8m of our premises at a fraction of the cost.”
In a statement, the firm said:
“Today’s announcement establishes Cityfibre as the UK’s third national digital infrastructure platform allowing millions more consumers and businesses to benefit from access to faster, more reliable services.
“The UK is a service-based economy, and this runs best on full fibre. Ensuring national coverage is critical and this can only be achieved by driving infrastructure competition at scale. This deal demonstrates the appetite from industry to see it established.”
Cityfibre also announced that it had modified the terms of its partnership with Vodafone, meaning the firm can open its networks to other internet providers sooner than planned.
The partnership with Vodafone aims to bring fast full-fibre broadband to 1m homes and business by 2021, and aims for 5m by 2025.
Tristia Harrison, chief executive of Talktalk, said: “This agreement is good news for Talktalk and good news for Britain’s fibre roll-out.
“Our investment over the last five years and the excellent work delivered by the Fibrenation team, combined with Cityfibre’s well-established platform, will support wide-geographical reach of full fibre and further drive competition and customer take-up in the market.”
The deal is subject to approval from Talktalk’s shareholders.