May 2021

ConnectFibre – Infrastructure growth capital for FTTP rollout

Infrastructure growth capital for FTTP rollout

Full Fibre Limited secures investment to deliver Fibre Only, Wholesale Only, Gigabit Broadband to more than 500,000 underserved premises by 2025

Wholesale fibre operator Full Fibre secures financing to provide wholesale gigabit services, primarily across the West Midlands, Central and South West

Wholesale fibre network provider Full Fibre Limited has announced a financing deal with specialist infrastructure investment fund Basalt Infrastructure Partners III (“Basalt”) that will see the company spread its wholesale fibre-only infrastructure to at least 500,000 additional premises by 2025. The business will continue its focus on ‘forgotten’ market towns and areas, initially in the West Midlands, Central and South West, that might otherwise be left behind by the national FTTP rollout.

The deal means Basalt takes a majority interest in Full Fibre and will provide both capital investment and additional management expertise in growing successful infrastructure businesses. This investment will augment and scale Full Fibre’s existing build capacity and is set to expand its lightning-fast, gigabit fibre optic network to the first 100,000 premises in 2021 and at least 500,000 by 2025.

Unusually for an Alternative Network Provider, Full Fibre is a wholesale only network operator. Full Fibre concentrate on working with a growing number of retail broadband providers to deliver transformative gigabit connectivity across previously underserved market towns, whereas most other providers look to sell their services directly to consumers which can restrict consumer choice and competition.

The move by Basalt continues the trend of established infrastructure investors injecting capital into the UK broadband space. The increasing prevalence of challenger alternative networks, supported by private equity, is fast delivering a new, better future-proofed, utility asset across the UK. To date c. £10bn of private investment into alternative networks has been announced, which is expected soon to exceed the £12bn commitment by the incumbent BT and dwarfs the governments reduced commitment of £1.2bn against their £5bn manifesto promise.

COVID-19 has shown the stress put on the ageing copper network as the economy moves further and faster towards a skills-based, technology-first, flexible working economy. The UK is fast closing the gap between itself and other EU nations in providing gigabit connectivity with the industry regulator OfCom estimating coverage to have reached 18% this month, up from just 12% at the start of the year. This new national infrastructure is needed to unlock economic growth and to help UK PLC maintain a competitive edge after leaving the European Union. With unemployment climbing, these record levels of investment provide a booming employment market and the completed infrastructure facilitates the remote learning and social mobility needed to re-skill the workforce.

Full Fibre CEO Oliver Helm said:

“Full Fibre’s mission has always been to deliver pure fibre, wholesale only networks to underserved market towns. The current environment has highlighted more than ever the need for gigabit-capable fibre broadband to be available as standard, and we are delighted to work with Basalt to accelerate this rollout, fueled further by the strengthening of our management team.

The regulator has been clear that a competitive market for consumers is vital, and the simple presence of a new infrastructure may not be sufficient to deliver this. It is vital that new infrastructure provides a competitive wholesale market to consumers, giving them the ability to move their purchasing power in search of quality, price and service.

Our Wholesale Only, Fibre Only approach provides a future proofed, competitive marketplace to both ISPs and consumers, that is key to unlocking the technology-lead, flexible working economy. As we invest millions of pounds into these market towns, our new fibre infrastructure will help to revitalise businesses, drive economic growth and unlock social mobility where traditional copper services have frustrated progress.”

Full Fibre will announce the first wave of towns that will be built early in 2021.

Steven Lowry, Partner of Basalt Infrastructure Partners LLP and adviser to Basalt, said:

We are pleased to have acquired Full Fibre through a bilateral acquisition process and to support the company’s business plan through further capital investment. We look forward to working closely with the management team to accelerate the delivery of reliable, wholesale, and high-speed FTTP services to underserved market towns in the West Midlands, Central and South West of England.”

Axxeltrova was the exclusive corporate finance and strategy advisors to Full Fibre for this fund raise. As part of this process, Axxeltrova advised the company on its wholesale fibre strategy and produced its investment case and financial model and successfully marketed the opportunity to key institutional investors in the UK, Europe and the US.