CityFibre hopes to net around £200 million from a new funding round as it looks to deploy FTTH to premises in up to 10 UK cities.

The fibre provider also unveiled plans to acquire wholesale broadband company Entanet and expand its metro network as it looks to take the fight to Openreach and Virgin Media.

To pay for the three-pronged strategy, the company plans to raise £185 million from new and existing shareholders by selling 336.3 million new shares – around 126.6 percent of its existing share capital.

Woodford Investment Management has already agreed to spend £36 million on purchasing 65.5 million shares, which are being offered at 55 pence each – a discount of nine percent.

CityFibre hopes to raise a further £15 million from the sale of an additional 27.2 million shares, although these are not underwritten by banks.

Up to half of the proceeds will be spent on deploying FTTH in five to 10 UK towns and cities from 2018.

The company did not specify where the new networks would be, but said it was in advanced discussions with “a number of consumer focused channel partners” about its plans.

The roll out builds on a joint venture CityFibre has with Sky and TalkTalk that has seen FTTH deployed to homes and businesses across York over the past three years.

Sky pulled out of the JV, which is averaging takeup rates of 27 percent, in October last year.

CityFibre also plans to extend its metro networks from its current footprint of 42 towns and cities to 50 or more by 2020.

It said up to 40 percent of the £200 million would be spent on growing this infrastructure as well as selling more to the public sector and business market verticals.

Finally, £29 million of the new cash will be spent on acquiring Entanet, a provider of wholesale broadband.

CityFibre will gain access to Entanet’s 1,500 channel partners and said it expects synergies of over £3 million a year within three years from combining the two product portfolios.

Greg Mesch, Chief Executive Officer of CityFibre, said: “We are building Gigabit Britain, driven by growing demand from Internet Service Providers and their customers to switch to full-fibre infrastructure.

“This is about more than just better broadband – this is about future-proofing the digital infrastructure we’ve all come to rely on at work, at school, at home and in our communities. It’s also about stimulating the market, creating jobs and growth.

“The Government and Ofcom recognise that investment in alternative fibre networks will catalyse growth in the UK’s digital economy as well as reduce the country’s reliance on BT Openreach.”

The CityFibre announcement follows the UK Government’s launch earlier this week of a £400 million Digital Infrastructure Investment fund, which aims to speed up the roll-out of full fibre broadband.

The government also introduced a law to Parliament which will provide 100 percent business rates relief to firms installing fibre within the next five years.

Last year, Ofcom announced plans to reduce dependence on Openreach by making it easier for alternative broadband providers to build fibre networks, which may include allowing them to use BT's poles and ducts.

Openreach is in the process of making itself a legally separate entity from parent BT, following another Ofcom intervention, and faces the prospect of wholesale price caps.

Virgin is also facing its own problems, having misreported the number of premises that are connected to the latest broadband technology.

Read more: Q&A: CityFibre Co-Founder Mark Collins

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