UK ISP G.Network has secured a major fund raise from USS and Cube Infrastructure Managers, which will enable them to invest £1 billion to help deploy their gigabit speed Fibre-to-the-Premises (FTTP) broadband network across 1.4 million premises in London (12 boroughs) over the next 5 years.
The provider, which was initially supported by roughly £65m of private investment (here) and is partly owned by Luxembourg-based Cube Infrastructure Managers, had been busy deploying their “open access” (i.e. can be harness via wholesale by other ISPs) full fibre network across parts of London (since 2018/19). Despite being a fairly new entrant to this market, they’ve already built enough to cover around 160,000 premises.
Earlier the operator was in the process of seeing additional investment to help fund their future plans (here) and that process clearly went extremely well. The deal includes a new equity investment by USS, the UK’s largest private pension scheme by way of assets, of “up to” £295m over 6 years in G.Network’s parent; as well as debt secured from four banks of “up to” £745m, which is “contingent on passing certain milestones.”
The deal, which is also expected to create 1,250 new jobs (mostly engineers), marks one of the largest single agreements for an alternative network provider since Cityfibre’s announced their original £2.5bn FTTP rollout plan in 2018, which itself has since grown to £4bn
G.Network is currently working with 8 local authorities and say they will bring their FTTP rollout to a further 5, while “aiming to connect at least 80% of premises in each“. Overall, the Company plans to dig around 4,500km of streets, reaching approximately 1.4 million London premises, including many in underserved areas.
Sasho Veselinski, G.Network CEO, said:
“High speed, reliable connectivity is critical to the home and work lives of Londoners. That’s why G.Network is undertaking a fundamental upgrade of the capital’s telecoms infrastructure from copper to fibre. We are rebuilding London’s broadband from the fibre up, bringing first-class connectivity to residents and businesses without expecting them to pay more. We’re very pleased to be working with USS, Cube and our banking partners on this project, and look forward to many years of successful partnership.”
The Mayor of London, Sadiq Khan, said:
“This additional investment is great news for our city and will mean new jobs in infrastructure and faster internet speeds for Londoners at home and at work. At a time when so many are reliant on good connectivity, we’re encouraging more investment in full fibre by working with London’s 32 boroughs and TfL to provide better access across the capital.”
The move puts G.Network on course to build itself into becoming a serious competitor to establish giants like Openreach (BT) and Virgin Media, as well alternative network providers like CommunityFibre and Hyperoptic that also have a strong fibre base in London. No doubt we’ll see more overbuild between these networks going forward.
The announcement comes after the UK Government watered down their own £5bn Gigabit Broadband Programme target, which might be taken as a sign that the appetite to invest in full fibre infrastructure has not been dampened. But admittedly the government’s programme is focused on uncompetitive rural areas, while this one is targeted at a much more competitive urban market.
Residential packages tend to start from £28 inc. VAT per month (£22 on a special offer) for an unlimited 150Mbps (50Mbps upload) service, which includes a free wireless router and connection. The cost rises to £57 per month for their top 900Mbps symmetric tier (£48 on a special offer), available on a 12 or 24 month contract term.
Rothschild & Co acted as principal financial advisor to G.Network on this transaction, which is expected to complete in the next few days. Meanwhile DC Advisory acted as financial adviser to USS. DLA Piper UK LLP and Clifford Chance LLP also acted as legal advisers to G.Network in connection with the equity and debt aspects of the transaction, respectively. Linklaters LLP acted as legal advisers to USS.
Investec Bank PLC also acted as underwriter on this transaction for the debt.