Goldman Sachs and Cityfibre Sniffing Acquisition of TalkTalk’s FibreNation

Monday, September 2nd 2019

A new report claims that the Goldman Sachs backed Cityfibre project, which is in the process of investing £2.5bn in order to rollout a 1Gbps FTTH broadband ISP network to 5 million UK premises by the end of 2025 (here), could be looking to hoover up TalkTalk’s sibling wholesale FibreNation company.


The FibreNation project was established by UK ISP TalkTalk last year and aspires to deploy a similar “full fibre” broadband network to cover 3 million premises, although it has yet to raise the investment for that. So far the wholesale network only has around 50,000 premises passed in York and they’re only just starting to build out to several towns including Harrogate, Knaresborough, Dewsbury and Ripon (here).


Crucially FibreNation was established as a separate company from TalkTalk and a report on Sky News now claims that the Goldman backed Cityfibre has allegedly tabled a bid to buy 100% of the new company from the ISP. The move is interesting for a number of reasons, not least the fact that FibreNation have yet to build much and has also been struggling to raise the c.£1.5bn estimated to conduct its rollout.


Lest we forget that Cityfibre and TalkTalk actually worked together on the York build before FibreNation was established and the civil engineering side then shifted on to a more independent footing. As such it seems unlikely that TalkTalk would be willing to let FibreNation go without first securing a good price (hard when you don’t have much of a network yet) or some degree of preferential access to the fibre (again, hard when you don’t have much to offer and Cityfibre already has such an agreement with Vodafone).



However Sky’s sources further claim that around three different parties, including other infrastructure funds, are also in discussions with TalkTalk and its advisers at the investment bank Lazard. In that sense this could just be the usual corporate game of trying to drum up investment for the new project. At this time neither side is commenting and the terms of such a deal remain unknown.


We’ve long predicted that consolidation would be inevitable but this is coming a little earlier than expected.


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