Gigaclear is reportedly working with Rothschild bankers to raise up to £300 million to fund further fibre network deployments.
According to Sky News, UK altnet is in the process of securing between £200 million and £300 million in new capital, but its source has not been disclosed. So far, Gigaclear has nothing to say on the matter. There aren't many details in the report, other than that the funding is likely to consist of debt and equity. But despite the lack of reliable information, it's a very plausible story.
Gigaclear is one of a growing number of investor-backed fiber manufacturers in the U.K., and the desire to seek more funding is not uncommon. Deploying fiber is a costly business, albeit one with significant potential returns, and after a period of market quietness a few years ago, everyone is now involved and the investment community loves it.
For its part, the last capital injection announced by Gigaclear was late last year. The operator detailed a £190m facility from ING, ABN Amro, ING, Lloyds Bank, NatWest, NIBC and UKIB, designed to help it achieve its next coverage milestone.
"This round of debt financing ensures we are well positioned to meet our target of connecting 500,000 homes and businesses to our ultra-high-speed, full-fibre network by 2023," said Ian Wade, the company's chief executive, at the time.
By the end of 2021, Gigaclear claims to cover 250,000 UK premises, of which 200,000 are actually ready for service, and says it has 50,000 customers. Last year alone it added 80,000 homes, and in the first half of this year it reportedly added another 50,000 to its total.
The Sky News report does not speculate on any new targets for Gigaclear if it is successful in its recent financing bid. But it is reasonable to speculate that any funding announcement is likely to be accompanied by plans to expand the network by hundreds or even hundreds of thousands of homes.
Infracapital-owned Gigaclear is one of a growing number of small fiber manufacturers in the UK that are keen to bring high-speed connectivity to small towns and rural areas. Its coverage is quite extensive compared to some, and the company has already laid cable underground in more than a dozen counties. But regardless of size, the UK network is growing fast and they are keen to expand their coverage compared to their competitors.
At the top end of the market, Vodafone last month claimed to have the widest full-fiber coverage in the U.K., covering 8 million homes, even though the bulk of its network is provided by wholesaler CityFibre. Notably, CityFibre managed to raise the bulk of its £5 billion in June to complete the financing of its fiber infrastructure, which, among other things, helps illustrate the difference in scale between alternative networks in the UK.
Meanwhile, talk of TalkTalk finding a buyer has not died down, with Virgin Media O2 emerging as the latest rumored candidate, a move that would bolster its ambitions to compete with BT's Openreach. The deal - regardless of who the eventual buyer is; both Vodafone and Sky have ties to the telco - is more about buying broadband customers than networks, but it would provide someone with a customer base to help deploy a business model for its fiber network Overlaying on the financials.
At the bottom end, there are countless smaller companies like Gigaclear that are doing their own thing in their own space and attracting the interest of investors keen to put up the cash for a piece of the action.
So far, there may not be much going on with this story, but we expect to hear more soon.
