Goldman-backed CityFibre buys TalkTalk’s FibreNation for £200m

Goldman Sachs-backed telecoms company CityFibre has finally completed a deal to buy TalkTalk's fibre division after it was delayed for two months amid the uncertainty of the general election.

CityFibre will acquire FibreNation in a £200m deal, boosting its fibre broadband targets from a goal of connecting five million premises up to eight million.

Initially started as a regional joint venture in York, FibreNation currently connects around 50,000 homes with plans to expand to three million.

FibreNation comprises of one of Britain's first full fibre networks in York and has expanded to nearby towns. CityFibre, meanwhile, has emerged as one of the fastest-growing privately backed efforts that hopes to challenge the dominance of BT's Openreach.

While the deal had been slated to go through in November, it was pushed back amid the uncertainty of the general election.

Labour leader Jeremy Corbyn's manifesto pledge to nationalise BT's infrastructure arm Openreach and give away free broadband rocked Britain's telecom stocks and caused TalkTalk boss Tristia Harrison to put the deal on ice. As part of the sale, TalkTalk has agreed to become a customer of CityFibre's growing network.

CityFibre said it was planning to expand its fibre network across 100 towns and cities creating up to 7,000 construction jobs outside of London as part of a £4bn investment programme.

Greg Mesch said the deal established CityFibre “as the UK’s third national digital infrastructure platform” behind BT and Virgin.

The UK has lagged behind European and Asian nations in its full fibre network, with only around 10pc of households with access to fibre.

CityFibre was bought by a Goldman Sachs-backed consortium in 2018, taking the business private in a £538m deal. It counts Vodafone and TalkTalk, and potentially Sky, among its customers.

Ms Harrison, chief executive of TalkTalk, said its investment over the last five years would “support the wide-geographic reach of full fibre and further drive competition in the market”.