14 Dec 2015
CityFibre, which operates fibre-optic networks in UK towns and cities, has announced the conditional acquisition of national infrastructure assets from KCOM Group for a total consideration of GBP90.0 million (USD137.0 million). The purchase covers approximately 1,100km of metro network assets in 24 towns and cities, and a 1,100km long-distance network connecting 22 towns and cities, linking to data centres and wholesale internet peering points in London. The acquired assets do not include KCOM’s network assets in Hull and East Yorkshire.
Via the deal, CityFibre increases its metro fibre reach into 21 new markets, giving it a national metro fibre footprint covering 36 cities and major towns. It plans to integrate KCOM’s assets into its wholesale shared infrastructure model, for usage by national and regional service providers and mobile operators. Additionally, the acquired long-distance infrastructure assets will boost the connectivity of the CityFibre network; the purchasing group’s press release says that it currently operates ‘618 route kilometres of local access networks serving 1,017 customer connections in 61 towns and cities in the UK’ (including metropolitan fibre-optic networks in 15 markets).
Under the terms of the deal, CityFibre will provide KCOM with access to the acquired infrastructure for a term up to 15 years, subject to a minimum term of five years and a minimum revenue of GBP5.0 million per annum for those five years.
Greg Mesch, CEO of CityFibre, commented: ‘We are pleased to announce this transformational acquisition, which we believe will accelerate our growth target by five to seven years, creating a credible [wholesale fibre] alternative to BT Openreach across the UK.’
The acquisition constitutes a reverse takeover subject to shareholder approval, and CityFibre will present the proposals for shareholders at a general meeting on 12 January 2016.
CityFibre simultaneously announced an underwritten placing to raise GBP80.0 million at GBP0.50 per share, through finnCap and Liberum, acting as joint bookrunners.