(Sharecast News) - TalkTalk Telecom Group has agreed to sell its fibre assets, being FibreNation and its shareholding in Bolt Pro Tem, to CityFibre for £200m in cash, it announced on Tuesday, conditional on shareholder approval.
The FTSE 250 internet provider said it would also be repaid, up to an agreed capped amount, the increase in the amount of intercompany indebtedness between the group and the fibre assets from 15 November up to completion.
It said the sale was being underpinned by a long-term wholesale agreement with TalkTalk for residential and business products in the areas where CityFibre was building, while also allowing TalkTalk the flexibility to partner with other network providers.
TalkTalk said the sale would provide it with long-term benefits, giving it access to full fibre, delivering a superior customer experience for residential customers and businesses, and thus supporting customer retention and reducing its cost to serve.
The agreement would establish a 'Northern Centre of Excellence', the board said, and help to deliver "the next generation" of digital infrastructure throughout the North of England.
TalkTalk said it intended to use the net proceeds to strengthen its balance sheet.
It said the sale remained conditional on shareholder approval, and added that it had received commitments from shareholders holding, in total, 57.5% of its share capital to vote in favour of the sale.
Completion was expected to occur in March.
"We are pleased to announce today's agreement with CityFibre, which is good news for TalkTalk, and good news for Britain and its full fibre roll-out ambition," said chief executive officer Tristia Harrison.
"Our investment over the last five years and the excellent work delivered by the FibreNation team, combined with CityFibre's well-established platform, will support wide-geographic reach of full fibre and further drive competition in the market.
"The sale of FibreNation to CityFibre, in combination with a competitive wholesale agreement, enables us to continue our strategy to accelerate TalkTalk's fibre growth for our residential and business customers, thereby delivering a superior customer experience at an affordable price."
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