* Goldman Sachs-backed CityFibre buys FTTP network
* TalkTalk agrees wholesale deal with CityFibre
* CityFibre raises target to 8 million premises
(Adds CEO comments, detail)
By Paul Sandle
LONDON, Jan 21 (Reuters) - Britain's TalkTalk has
agreed to sell its fibre-to-the-premises (FTPP) network, which
has rolled out ultra-fast broadband connections in the northern
city of York, to Goldman Sachs-backed CityFibre for 200 million
pounds ($260 million).
TalkTalk also agreed a wholesale deal with CityFibre, which
will see it switch its residential and business customers to
CityFibre's FTTP networks, helping underpin the fibre network
operator's expansion.
TalkTalk started laying its own fibre optic cables in York
in a trial, initially partnering rival Sky and CityFibre, to
challenge BT, the national network operator.
BT has been criticised for dragging its heels in building
its own fibre-to-the-premises networks.
TalkTalk rolled the FTTP operation, which has connected
49,000 homes to date, into a new company, FibreNation, in 2018,
which has ambitions to build a network serving 3 million
premises.
TalkTalk CEO Tristia Harrison, who is focusing the company
on low-priced broadband, said it had been working on the deal
for a long time.
"We think the value is good, it's more than three times the
investment that we've made," she said in an interview.
A deal was delayed late last year when the opposition Labour
Party pledged to nationalise BT's Openreach network if it won a
December election, a move that would have upended the broadband
market. Boris Johnson's Conservatives later won a decisive
victory.
TalkTalk's shares were trading 0.5% lower at 114 pence in
early trade, as analysts at Jefferies said the deal terms were
in line with expectations.
Lazard acted as sole financial adviser to TalkTalk
on the deal, which will allow the company to cut its debt load
while retaining access to a FTTP network for its customer base.
CityFibre CEO Greg Mesch said buying FibreNation established
CityFibre as the UK's third national digital infrastructure
platform, behind Openreach and Liberty Global-owned
Virgin Media, and a major partner in the government's ambition
to roll out FTTP nationwide by 2025.
"The UK is a service-based economy, and this runs best on
full fibre," he said. "Ensuring national coverage is critical
and this can only be achieved by driving infrastructure
competition at scale. This deal demonstrates the appetite from
industry to see it established."
CityFibre, which is owned by Antin Infrastructure Partners
and Goldman Sachs' West Street Infrastructure Partners, will add
FibreNation's ambition of reaching 3 million premises by the
middle of the decade to its own 5 million target.
"Five million was roughly 60 towns, 8 million is roughly
across 100 towns and cities," Mesch said. "Our investment
commitment moves up from 2.5 billion (pounds) to now 4 billion
roughly of investment."
Mesch said CityFibre had reworked an existing wholesale
agreement with Vodafone to allow CityFibre to open up
its networks to other consumer broadband providers sooner than
planned.
($1 = 0.7689 pounds)
(Additional reporting by Pamela Barbaglia; editing by James
Davey and Kate Holton)
Vodafone (VOD)
BT (BT.A)