CityFibre has announced the conditional acquisition of the infrastructure assets of IT services provider KCOM Group for £90.0 million.
Assets include a metro network which spans approximately 1,100 kms across 24 towns and cities, and a national long distance network totalling approximately 1,100 kms that connects 22 towns and cities and offers connectivity into key data centres and wholesale internet peering points in London.
The acquired assets do not include KCOM’s network assets in Hull and East Yorkshire.
The consideration is £90.0 million in cash, to be financed through a combination of the net Placing proceeds and debt financing, and which the Directors estimate represents a 45% discount to costs of constructing the networks.
Under the terms of the Acquisition, CityFibre will provide KCOM with access to the acquired infrastructure for a term up to fifteen years, subject to a minimum term of five years and a minimum revenue of £5.0 million per annum for those five years.
The Acquisition will expand CityFibre’s footprint to 36 cities and major towns across the UK, providing pure fibre connectivity for use by regional and national service providers and mobile operators as a competitive wholesale alternative to BT Openreach.
Greg Mesch, Chief Executive Officer 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 alternative to BT Openreach across the UK. Furthermore, we are delighted to have received the support of our existing shareholders to fund this transaction, and we welcome new shareholders to the register.
“The acquisition of these assets represents a unique opportunity for CityFibre to increase its reach into 21 new markets, and enables this asset to be integrated into CityFibre’s wholesale shared infrastructure model, opening up the use of the network to many users. Following the acquisition, CityFibre will have a national footprint covering 36 cities with abundant fibre capacity for use by national and regional service providers and mobile operators.
“The demand for greater connectivity and future-proof networks in the UK has never been greater, and there is increasing recognition of this need from all stakeholders in the market. The acquisition of these assets will enable CityFibre to significantly accelerate its Gigabit City roll out and play a very meaningful role in redressing the legacy of underinvestment currently plaguing the UK connectivity landscape.”