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CityFibre on brink of revived £200m TalkTalk deal

by ace
CityFibre on brink of revived £200m TalkTalk deal

A £ 200 million takeover of a division of TalkTalk Telecom Group, which was stalled by Labor's pledge to nationalize broadband offerings, is about to be revealed.

Sky News found that CityFibre Holdings, owned by Wallman's Goldman Sachs investment bank, could sign an agreement to buy TalkTalk's FibreNation unit as early as Friday.

Negotiations on a deal were at an advanced stage late Thursday night, according to experts.

A source said a transaction could be announced before the weekend or on Monday, although they have warned that there is a small chance that it could still fall apart.

If concluded, an agreement would allow CityFibre to increase its goal of connecting five million households to full fiber broadband in 2025 to eight million.

This would also allow TalkTalk to reduce its debt level.

The deal was due to be announced in November, but was deflected by Labor's pledge to nationalize BT Group's Openreach broadband infrastructure division and provide free and fast broadband to all UK homes and businesses.

The deal would allow TalkTalk to reduce its debt level.

Since the Conservatives won last month's general election, TalkTalk has discussed selling FibreNation to other parties, including John Laing, but has decided to proceed with the CityFibre deal.

The quest to provide fast broadband services has become the subject of intense political scrutiny, with Boris Johnson demanding full fiber broadband provision for all UK homes by 2025.

On Thursday, Prime Minister and Baroness Morgan, secretary of culture, held a roundtable discussion with telecommunications executives to discuss progress toward that goal.

Top executives at CityFibre, TalkTalk and BT were among those who attended, with issues such as easing business rates and rural subsidies among those discussed.

Announced in February 2018, TalkTalk said it would fund 20% of FibreNation's new venture, with Infracapital, a fund backed by insurer Prudential, providing most of the money.

However, discussions with Infracapital were interrupted amid a dispute over the evaluation of TalkTalk's existing full fiber network in York.

Under the proposed deal with CityFibre, the Goldman-backed company will take full control of FibreNation, with TalkTalk receiving a cash payment and signing a long-term contract to be a customer of the company.

CityFibre, which is building fiber infrastructure in cities such as Aberdeen, Coventry and Milton Keynes, has reached an agreement with Vodafone to terminate an existing exclusivity agreement.

In total, CityFibre is expected to invest an additional amount of approximately £ 1.5 billion to reach its revised target of eight million homes.

Like other new competitors, CityFibre was created to take advantage of Openreach's market share, which now operates with BT's broader base.

Virgin Global, owner of Virgin Media, is in the process of establishing a new joint venture to compete more broadly in the broadband market.

Several smaller players, including Hyperoptic and Gigaclear, were also created, leading analysts to question how many of the new companies will ultimately succeed financially.

Meanwhile, BT signaled that it might have to cut its dividends to fund the huge investment needed to accelerate its full-fiber broadband offer.

CityFibre could not be reached for comment, while TalkTalk, which is being advised by Lazard bankers, declined to comment.


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