Vodafone has mounted an attack on the UK broadband market by backing plans to connect up to five million homes with new ultrafast fiber-optic lines, increasing pressure on BT to invest in upgrades and putting itself in more direct competition with Virgin Media.
Under a deal with Vodafone, the alternative network builder CityFibre will borrow up to £700 million (US$900 million) to connect a million homes in 12 cities by 2021. If the scheme is successful CityFibre will ask debt markets for more cash and connect a further four million across its overall footprint of 42 cities.
The company owns core fiber-optic infrastructure in cities including Sheffield, Edinburgh and Bristol and has been seeking telecoms retail partners to secure funding to build links into homes.
Vodafone has committed to pay wholesale charges for at least a fifth of the new lines for 10 years. If Vodafone commits to an extension the deal for one million lines is worth around £500 million (US$700 million) in revenue to CityFibre over 20 years.
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