Broadband network firm CityFibre has struck a £2.3 billion financing deal in a bid to shore up its finances and drive further growth.
The fibre broadband specialist, which is seeking to challenge BT’s Openreach, said the deal would include £500 million in new funding from existing shareholders, such as Goldman Sachs and Abu Dhabi’s sovereign investment fund Mubadala.
The group has also expanded its current debt facilities by £960 million and agreed a further £800 million “accordion” lending facility, which allows potential incremental increases in the debt.
It comes after CityFibre said there was a “material uncertainty” over its ability to continue without further funding in its accounts for 2023.
However, the company said it has reported its first “full year of profitability” over the past 12 months.
The group is expected to snap up smaller alternative networks, called altnets, with the fresh funding in order to consolidate its position in the market.
It comes amid pressure on independent firms from major players Openreach and Virgin Media O2, and high interest rates.
CityFibre is seeking significant growth this year after striking a major deal with Sky.
Greg Mesch, chief executive of CityFibre, said: “This round of financing will supercharge CityFibre’s next phase of growth as we consolidate the altnet sector, accelerate the pace of customer connections and unleash the full power of our market-leading network, for the benefit of all our partners, their customers and for the UK economy.
“There is huge opportunity ahead for CityFibre and it is testament to the success of the company that we have such strong backing from our lenders and shareholders.
“This multibillion-pound investment into critical digital infrastructure will deliver significant benefits across the UK, helping to realise potential and unlocking economic growth.”
Chancellor Rachel Reeves said: “Today’s announcement shows Britain is attracting billions of pounds of investment, including through the national wealth fund, driving growth across British businesses.
“Investing in our digital infrastructure is key to ensuring our economy is fit for the future.”
