Gigabit City builder snaps up £5m fibre networks

IT SERVICES provider Redcentric has sold some of its fibre networks to Gigabit City builder CityFibre in a deal worth £5m.

It says the transaction is “earnings neutral” as although it will cost the company £500,000 a year initially, reduced depreciation and interest charges offset the decline.

The Harrogate-based company has disposed of 137km worth of networks in Cambridge, Portsmouth and Southampton, which serve 188 customers.

CityFibre have also acquired its unused fibre optic network and infrastructure from Redcentric in Nottingham, Derby, Northampton and Newbury as part of the transaction, which sees it expands its metro fibre presence to 40 cities, including 25 of the top 30 cities outside Greater London.

Redcentric have signed a network access agreement with CityFibre to provide access to the network in support of its customers, who are unaffected by the disposal.

The network access agreement, which has a 10 year duration, with minimum levels of annual commitment, which reduce over time.

Fraser Fisher, chief executive officer of Redcentric, commented: “This disposal is in line with our strategy of control over our customer affecting core assets while not tying up capital where ownership is unnecessary.

“This mirrors our Datacentre approach where the physical buildings are held on long leases rather than freeholds but we retain complete control of the assets. We will continue to service customers in Cambridge and Portsmouth exactly as before, and expect to generate additional revenues and network efficiencies over time as a result of our developing relationship with CityFibre.”

Greg Mesch, chief executive of CityFibre, which designs, builds and operates fibre networks in the UK commented: “We’re delighted with today’s acquisition of duct and fibre network assets from Redcentric, which takes us to an important milestone of coverage of 40 cities.

“In these assets, we have identified what we believe to be underutilised legacy fibre assets which will flourish by being part of CityFibre’s wholesale shared infrastructure model. We are particularly pleased to welcome Redcentric onboard as the 51st service provider partner in our ecosystem, and we look forward to working with them across our broader national footprint in future.”