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CityFibre expands nationally with KCOM network purchase

Alternative operator CityFibre will step up its challenge to BT Openreach with its latest move, which will see it acquire KCOM Group’s national fibre and duct network assets for £90 million.

CityFibre has also secured financing of £180 million – £80 million of new equity and £100 million in debt facilities – to fund the acquisition and continue to commercialise its national network.

The acquisition of KCOM’s national communications infrastructure (excluding Hull and East Yorkshire) will triple the size of CityFibre’s network, increasing its presence to 36 cities with plans to target a total of 50 cities by 2020 – or about 20 per cent of the UK.

The deal will make CityFibre the UK’s largest wholesale infrastructure provider after BT and the first challenger to the national incumbent, the company claims.

“This is the most significant event to take place in the UK’s digital infrastructure market in a decade,” stated CityFibre CEO Greg Mesch. “The UK now has a secure independent infrastructure alternative.”

CityFibre is an independent wholesale provider of fibre infrastructure to mid-sized cities and major towns across the UK, providing gigabit-capable infrastructure for enterprise and public sector organisations, service providers, mobile network operators and businesses.

The infrastructure assets that it has purchased comprise 1,100 km of duct and fibre network in 24 UK cities, as well as 1,100 km of national long distance network that connects these cities to major data-centres across the UK and to internet peering points in London.

These assets include ducts, sub-ducts, chambers, cables and cable joints, optical distribution frames (ODFs) and patch cords.

KCOM Group has retained ownership of its network switching, transmission, control and application elements, and has entered into a parallel agreement with CityFibre worth £5 million annually for continued access to the ducts and other infrastructure.

The acquisition will enable CityFibre to expand its wholesale business through its growing portfolio of service provider partners, including KCOM which will now have access to CityFibre’s full national footprint.

The expanded network footprint will enable CityFibre to deliver end-to-end wholesale dark fibre connectivity to national and regional service providers, data centres and mobile operators in search of a genuine alternative to connectivity products offered by BT Wholesale and BT Openreach.

On completion – expected in January 2016 – CityFibre’s expanded footprint, spanning 36 cities and interconnected by the national long distance network, will address more than 7,000 mobile cell sites, 24,500 public sector sites and 245,000 businesses.

Furthermore, the acquisition positions CityFibre as an enabler for gigabit speed, ultrafast broadband to support fibre-to-the-home (FTTH) deployments to 3.5 million homes. Its metro and national networks have abundant capacity to support the UK’s demand for high-bandwidth, ultra-low latency services, the company claims.

The acquisition builds upon CityFibre’s successes to date, including its rollout of Gigabit Cities, the UK’s first deployment of fibre-to-the-tower (FTTT) with EE and Three UK, the FTTH deployment in York with Sky and TalkTalk and a master services agreement with Vodafone. To date the company has launched six ‘Gigabit City’ projects in York, Peterborough, Coventry, Aberdeen, Edinburgh and Glasgow, in addition to its joint venture with Sky and TalkTalk in York (see Firms join forces to create ultra-fast FTTP in York).

“Now, meaningful scale can be offered to partners that will transform the UK’s connectivity landscape,” the company said in a statement.

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