CityFibre (AIM:CFHL) is set to ramp up the competition for BT and VM02 another notch following a £300mln investment into the business from an Abi Dhabi based sovereign wealth fund.
Mubadala Investment Company, one of the Gulf's largest investors, will inject the cash, which will take the amount of money raised by the London-based broadband group to £1.4bn in six months, or the largest funding yet by a UK broadband outfit according to Sky News.
An official announcement is likely shortly according to the report and will underline the frenetic pace of investment in new fibre-to-the-home networks across the country.
BT’s broadband arm Openreach recently accelerated plans to reach 25mln households with fast fibre connections by 2025 but is facing increasing competition from rivals with similar plans.
VM02 (Virgin Mobile O2) is aiming to pass 15.5mln premises by the end of 2028 and also looking at a partnership for a new network with Sky reported to be one of those interested.
CityFibre (AIM:CFHL), which already boasts Goldman Sachs (NYSE:GS) as one of its backers, is proposing to spend £4bn to take superfast broadband to eight million homes by 2025.
Traditionally, the firm has targeted city centres and business hubs, but is now expanding to 285 towns and cities and is signing up other telcos such as Vodafone, TalkTalk and Zen to run on its network.
All of this investment in infrastructure has sparked some analysts to question whether it will dilute returns eventually as the competition for customers ratchets up.
UBS in particular has said in it remains cautious of the prospects for BT, saying its “wary of rising broadband infrastructure competition for Openreach from both VMO2 and a growing number of well-funded altnets, most notably Cityfibre".
Shares in BT rose 2.3% today to 182.5p.