CityFibre spurs altnet consolidation with purchase of Lit Fibre
CityFibre, Britain's biggest independent rival to BT's Openreach arm, will this week spark another round of consolidation in the altnet sector by snapping up Lit Fibre in an all-paper deal.
Sky News has learnt that CityFibre, which has set a target of connecting 8m homes by the end of next year, has agreed a deal to buy its smaller rival.
City sources said on Wednesday that the transaction was likely to give Lit Fibre's owner, Newlight Partners, roughly 2% of the combined group.
That would mean CityFibre, which is valued at about £4bn, would have bought Lit Fibre for roughly £80m.
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The deal comes as many of the dozens of altnet providers are struggling to contend with rising build costs in a market dominated by BT.
CityFibre has raised billions of pounds in debt and equity funding to facilitate its expansion.
The Lit Fibre deal will accelerate its national full-fibre rollout by close to 300,000 premises, according to one person close to the deal.
An announcement is likely on Thursday, the person added.
Lit Fibre's existing footprint of more than 200,000 homes is spread across counties including Wiltshire, Gloucestershire and Hertfordshire.
CityFibre's board, chaired by the former National Grid chief executive Steve Holliday, is expected to target further acquisitions over the next two years.
It has already acquired a number of other telecoms infrastructure companies, including KCOM and Redcentric's national network assets, as well as Entanet and FibreNation.
A CityFibre spokesperson declined to comment, while Lit Fibre could not be reached for comment.