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CityFibre shares surge as it agrees to be taken private
(WebFG News) - CityFibre shares were motoring ahead on Tuesday, as the broadband group agreed to be taken private, while also reporting full year results where turnover improved 126% to £34.8m.
Directors of the AIM-traded fibre-optic infrastructure operator agreed to a £538m take-private deal, a 92% premium to Monday's closing valuation. The bid vehicle is jointly owned by Antin and West Street Global Infrastructure Partners, backed by Goldman Sachs.
Looking at 2017 results, £15.4m was attributable to the consolidation of Entanet's results for the five month post-acquisition period.
Gross profit was up 48.4% at £20.1m, of which Entanet contributed £3.8m, with gross profit up £2.8m - or 21% - excluding the contribution from Entanet.
The company reported a gross margin of 57.8%, down from 88.1% in the prior year, although excluding the impact of Entanet, gross margin stood at 84.5%.
Adjusted EBITDA grew to of £4.5m from £2.5m.
CityFibre added initial contract value of £26.3m during the period, with a further minimum volume commitment from Vodafone over the initial 10 year period expected to exceed £200m.
Its net loss after tax increased to £16.6m from £12.6m.
On the operational front, the company completed a £201.8m fundraising to fund growth of its full fibre network and the acquisition of Entanet, which it described as a provider of wholesale fibre connectivity and communications services to business internet service providers.
It also began a strategic partnership with Vodafone to deliver fibre-to-the-premises to up to five million homes by 2025.
Cumulative on-net connections sold, excluding FTTP and Entanet, were up 27% compared to 2016, to 9,204, while cumulative on-net connections delivered rose 26% to 4,975.
Entanet's off-net leased lines estate was 14% higher at 3,954, compared 3,456 in 2016.
The company's total route kilometres of fibre infrastructure expanded to 3,740 km fro, 3,383 km in the prior year.
Since year-end, CityFibre announced Milton Keynes, Aberdeen and Peterborough as its initial three fibre-to-the-premises (FTTP) cities under the first phase of the Vodafone partnership.
Construction was now underway in Milton Keynes, with Aberdeen and Peterborough in the advanced planning phase.
The board also said its debt refinancing process was progressing "well", with closing expected in the second half.
It also confirmed that Coventry, Edinburgh, Huddersfield and Stirling would be the next cities to benefit from the deployment of the full fibre broadband programme.
The investment in those cities, together with Milton Keynes, Aberdeen and Peterborough, would bring Vodafone and CityFibre's FTTP roll-out above the half a million premise count, and would also take CityFibre's committed infrastructure investment in the project to at least £315m.
"I am delighted to report that CityFibre has made excellent strategic progress throughout 2017, a year in which we moved a step closer to realising our long-held vision of a full fibre future across the UK," said chief executive Greg Mesch.
"We continued to make significant headway within the public sector market and we now are well-positioned to benefit from a more supportive public policy environment, including the DIIF and LFFN initiatives."
Mesch said the board had strengthened CityFibre's position in the business segment following the acquisition of Entanet, which brought a "well-developed" wholesale channel and service delivery platform that advanced the company several years in its evolution.
"Entanet is placing increasing volumes of new business on-net with CityFibre each month.
"We completed 2017 by signing a landmark FTTH agreement with Vodafone, which is the most significant alternative communications infrastructure development in the UK in at least 30 years," Mesch added.
"CityFibre is now firing across all our key market verticals and our focus is firmly on programme delivery and continued commercialisation."