Building a nationwide full-fibre network requires over £30billion of private funding
The UK fibre network roll-out is gaining speed: with rural areas largely underserved by broadband, the UK government set-out a mandate of having full-fibre to every home in the UK by 2033. Combined with a supportive regulatory framework, this has led to a plethora of fibre builds by new alternative service providers. However, they’re facing a big challenge: most of the UK’s broadband infrastructure was built before fibre technology, and to date investment has prioritised upgrading the copper network to increase achievable speeds, rather than entirely replacing it. Ofcom estimates the costs of building and maintaining a nationwide full-fibre network at £33.4billion.
Over the last two years, NatWest has been central to developing the alternative fibre network in the UK, financing the much-needed roll-out of high-speed fibre broadband to millions of homes in England, Scotland and Wales. G Network’s £745million financing package last December marked our fifth UK fibre-roll-out in 2020, highlighting our lead bank position in the Alternative Fibre Network sector.
Customers we’ve supported over the last two years include:
CityFibre: in December 2018 we helped arrange a £820million debt facility for CityFibre, the UK’s largest independent provider of full-fibre infrastructure. The 7-year loan, which includes a £45million revolving credit facility to add flexibility, supports CityFibre’s UK-wide roll-out of Fibre-to-the-Premises (FTTP). The company aims to bring full-fibre to 30% of the UK market by 2025, including up to 8million homes, 800,000 businesses, 400,000 public sector sites and 250,000 5G access points.
Hyperoptic: in October 2019 we supported infrastructure sponsor KKR to acquire Hyperoptic, a leading UK full-fibre broadband provider. Hyperoptic offers consumers and businesses gigabit-capable broadband with average speeds of up to 900Mbps, across 43 cities and towns. The £535million seven-year debt package includes a £500million capex facility and a £35million revolving credit facility. This financing will be utilised to support Hyperoptic in its next phase of growth, and realise its ambitious infrastructure plans to build out its hyperfast network to millions of homes.
Gigaclear: in March 2020 we structured a financing package for Gigaclear, UK’s leading alternative provider of wholesale full fibre network infrastructure on a mission to unlock the potential of poorly-connected communities across the UK. The financing consists of a £475million seven-year capital expenditure facility and a £45million revolving credit facility. The money will help Gigaclear with their continued full-fibre broadband roll-out across rural UK towns, ultimately providing fibre to 595,000 homes by 2025, bridging the digital divide.
WightFibre: in July 2020 we provided a £50million bi-lateral senior financing package to WightFibre, the only full-fibre broadband provider on the Isle of Wight, which is currently delivering ultrafast broadband to over 25,000 premises. The credit facility is helping the company extend its FTTP deployment to reach circa 95% coverage of the island – in excess of 70,000 premises. With its’ futureproof point-to-point network design, the new WightFibre full-fibre network will make the Isle of Wight one of the best-connected places on the planet.
Community Fibre: in October 2020 we facilitated a financing package to London-based Community Fibre, comprising a five-year £193million capex facility, an uncommitted accordion of £100million and a £15million working capital credit. The money will support Community Fibre’s roll-out of 100% full-fibre broadband to one million homes, primarily in social housing units across London.
G.Network: in December 2020 we structured a debt package of an initial £229million credit facility for G.Network, a rapidly growing full-fibre operator, providing high-speed connectivity infrastructure and services to Central London by replacing the capital’s old copper wire network street by street with fibre. The financing deal also comprises uncommitted accordion features up to £516million, which G.Network can draw later to support its full build-out to around 1.4 million London homes.
For four of these six financing deals we also acted as underwriter for parts of the debt.
Commenting on NatWest’s lending for this sector, Bruce Riley, Project Finance at NatWest, said: “We are delighted to be supporting our customers in the Alternative Fibre Network Sector as they provide much-needed investment in the UK’s broadband infrastructure. Ensuring households, businesses and communities have access to state-of-the-art broadband fibre connectivity helps businesses to grow, contributes to increased productivity and a more inclusive society. This helps us deliver on the Bank’s purpose to champion the potential of people, families and businesses to thrive.”
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