CityFibre buys TalkTalk's fibre network for £200m

CityFibre has acquired TalkTalk's fibre network for £200 million.

TalkTalk's FibreNation network was set up as a trial with Sky and CityFibre to bring fibre-to-the-premise (FTTP) to areas that BT's Openreach had yet to cover with full fibre. FibreNation covers 49,000 premises in York, with plans to reach three million by 2025.

The deal had been in the works for some time, according to TalkTalk CEO Tristia Harrison, but was delayed by last year's election, after the Labour Party said it would nationalise Openreach, the infrastructure company owned by BT, if it managed to win the election, which it did not.

The deal between the two companies will also see TalkTalk join CityFibre as a wholesale customer for business and consumer markets.

Aside from the network already operating in York, FibreNation already has construction underway in Harrogate and Dewsbury, with plans in place for Knaresborough and Ripon.

"Today’s announcement establishes CityFibre as the UK’s third national digital infrastructure platform allowing millions more consumers and businesses to benefit from access to faster, more reliable services," said Greg Mesch, CEO at CityFibre. The company would be third behind Virgin Media and BT's Openreach.

FibreNation's target of three million homes by 2025 will be added to CityFibre's own five million goal, meaning the company now plans to cover eight million premises by the middle of the decade. "Five million was roughly 60 towns, eight million is roughly across 100 towns and cities," Mesch told Reuters. "Our investment commitment moves up from £2.5 billion to now £4 billion roughly of investment."

Mesch said the deal showed the British telecoms industry was ready and willing to invest in rolling out full fibre. "Ensuring national coverage is critical and this can only be achieved by driving infrastructure competition at scale," he said. "This deal demonstrates the appetite from industry to see it established."

Harrison said the deal was also good for TalkTalk, which is looking to step back from building infrastructure and return to purely selling broadband access to customers. "We think the value is good, it’s more than three times the investment that we’ve made," she told Reuters.

The partnership between TalkTalk and CityFibre required a previous deal with Vodafone to be reworked to allow CityFibre to open up its network to other consumer ISPs sooner than planned.