CityFibre secures £2.3bn funding to expand broadband network and pursue acquisitions

CityFibre, Britain’s largest alternative full-fibre broadband network, has announced it has secured £2.3 billion in fresh funding as it seeks to both expand its network and acquire smaller rivals amidst rising industry pressures. The funding includes £960 million in debt from lenders such as ABN Amro, ING, and Lloyds, alongside Britain’s new National Wealth Fund. An additional £800 million facility has also been put in place, which the company can unlock depending on the pace of its consolidation strategy.

Existing shareholders, including investment giants Goldman Sachs and the Abu Dhabi sovereign wealth fund Mubadala, have contributed £500 million in equity as part of the refinancing package. This move ends what has been a protracted and challenging negotiation process for CityFibre, which faced significant uncertainty due to its heavily loss-making position. Recent financial statements had warned of a “material uncertainty” regarding the business’s ability to continue without external financial support.

Founded in 2011 by chief executive Greg Mesch, CityFibre has established itself as a direct challenger to BT’s Openreach and Virgin Media O2. The company leases its network to broadband providers such as TalkTalk, Vodafone, and Sky, rather than selling services directly to customers. To date, its full-fibre infrastructure has reached a total of 4.5 million premises, with a target of extending this to 8 million by the end of the decade.

The company has been adding new customers at an accelerated pace, moving from 20,000 orders per month at the start of the year to 50,000. This includes customers transitioning to CityFibre’s infrastructure through partnerships with major broadband providers like Sky. It currently serves more than 620,000 households.

CityFibre is now turning its focus to acquisitions, aiming to capitalise on opportunities to consolidate smaller rivals in the broadband sector. The business is believed to be in early-stage talks to acquire All-Points Fibre, a competitor that has built its network to 568,000 homes, according to Enders Analysis. If completed, this would represent CityFibre’s largest acquisition to date and could help it exceed its original 8 million premises target for the decade.

The alt-net industry has attracted billions in investment in recent years, but rising interest rates, increasing costs, and challenges in scaling customer bases have put many smaller players under financial strain. Consolidation is increasingly seen as a necessary strategy for these competitors to remain viable and achieve long-term profitability within an increasingly competitive market.