Cityfibre connects with Scottish cities as takeover agreed

● Edinburgh and Stirling latest locations to benefit from ‘Gigabit Britain’ strategy

Cityfibre yesterday pushed the button on major highspeed broadband roll-outs in two more Scottish cities as it agreed to a £537.8 million takeover by a consortium of investors backed by US banking giant Goldman Sachs.

The UK firm said that homes and businesses in Edinburgh and Stirling would benefit from “gigabit” speed full-fibre broadband – with work set to begin later this year. It follows an announcement in February that saw the group and partner Vodafone commit to delivering a city-wide roll-out of fibre infrastructure in Aberdeen.

Cityfibre said it would invest at least £110m of private funds in the Edinburgh and Stirling schemes. A detailed planning and build programme is underway for each city as part of the first phase deployment.

The new infrastructure will build on both cities’ existing “gigabit city” networks with homes set to benefit for the first time. Edinburgh’s network already spans some 150 kilometres, covering the city centre and Leith to Lasswade, Portobello to Corstorphine, and beyond the City Bypass to Currie.

Greg Mesch, chief executive at Cityfibre, said: “Edinburgh and Stirling will be among the first cities in the UK to benefit from this game-changing infrastructure programme, which will have a transformative impact on homes and businesses alike.

“We’re moving closer to our vision of a Gigabit Britain, where digital inadequacy is a thing of the past and full fibre connectivity is the norm.”

Shares in the group, which floated on the stock market in 2014, leapt after the takeover deal was unveiled.

The group announced its tie-up with Vodafone last year that will see the mobile giant market its broadband in about 12 towns and cities, starting with Aberdeen, Milton Keynes and Peterborough, with a target to reach up to 20 per cent of the UK’S population.

The takeover consortium comprises private equity firm Antin’s specialist infrastructure fund and Goldman Sachs’ West Street Infrastructure Partners. They bid 81p for each Cityfibre share – a 93 per cent premium to Monday’s closing price.

Chris Stone, chairman of Cityfibre, said: “Cityfibre has established itself as a leading independent provider of wholesale fibre infrastructure in the UK and has been on a transformational journey since its IPO [initial public offering] in 2014.”

In full-year results released alongside the deal, the firm reported an 80 per cent rise in underlying earnings to £4.5m for 2017. Revenues more than doubled to £34.8m from £15.4m the previous year.

On a bottom-line basis, the group sank deeper into the red with pre-tax losses of £16.6m from £12.6m in 2016.

In December, Cityfibre said it had signed a 19-year agreement with Commsworld that will extend its gigabit city broadband network to hundreds of Glasgow City Council sites. The deal covers 506 council-owned sites.