CityFibre IPO: Telecoms firm to float in London

on Nov 26, 2013
Updated: Oct 21, 2019
Listen, Tuesday, November 26: CityFibre, a UK-based fibre-optic infrastructure business, is preparing to float on London’s AIM market which is expected to value the company at between £50 million and £55 million, the Times has reported.

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The telecoms company, which claims to be “the largest provider of fibre infrastructure to the UK’s second tier cities” with a network of 30,000 km of cable covering 50 towns and cities across the UK, is looking to raise the stakes in its competition with BT for business in areas underserved by the nation’s telecoms companies. The debate around the digital divide in Britain has focused on users in rural areas but many consumers and businesses in second-tier cities also suffer from low broadband speeds and a reliance on BT to upgrade networks.

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According to The Telegraph, CityFibre “is believed to be about to begin a fundraising road show with potential investors to raise as much as £25 million ahead of a listing on the London Stock Exchange’s AIM”, the market for smaller, growing companies. It is understood that ahead of the initial public offering (IPO), the company has raised approximately £11 million from its board as well as private investors.

CityFibre was founded by  Greg Mesch who has built up five companies from start-up enterprises over the past 25 years, including Irish alternative telecoms company ESAT and Versatel, which built a network in Germany, Belgium and the Netherlands. ESAT was sold to BT for €1 billion (£837.7 million) and Versatel was sold to Sweden’s Tele2 for €2 billion (£1.67 billion).

The company is backed by the private equity investor Jon Moulton, who will keep a substantial stake after the float. CityFibre’s founders, directors and staff own half of the company shares.
The Times noted that North American private equity funds had shown interest in CityFibre but the company’s “management believes a British listing will strengthen its hand in bidding for public sector contracts.”

CityFibre is targeting locations including York, Bournemouth and Peterborough by building dense metropolitan networks in cities across the UK, aiming to turn them into ‘gigabit’ cities by delivering download speeds of up to 1Gbps to homes and offices.

The most recent development was the signing of a contract with the Peterborough City Council on November 13 to transform Peterborough into a ‘gigabit’ city. CityFibre had previously announced that it was to invest £30 million into the city to create a fibre network. The first services will go live in summer 2014, and the network is due for completion by April 2015.
The company will offer a business broadband package with speeds of between 500Mbps and 1Gbps at a cost of £50 to £100 per month, while the consumer fibre-to-the-home (FTTH) broadband package will cost £25 to £50 a month for the same speeds.
CityFibre believes there are 100 such cities in Britain where it can expand to, that will cover roughly 10 percent of the population. The company hopes to build a credible third-placed infrastructure player that can compete with BT and Virgin Media.
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