TalkTalk to build FTTH network for three million UK premises

TalkTalk and Infracapital have announced plans to build a FTTH network that will cover three million homes and businesses in the UK.

The operator and the infrastructure equity investment arm of M&G Prudential said they had agreed “heads of terms” – equivalent to a letter of intent or a memorandum of understanding – on the creation of an independent company to carry out the build.

The two companies plan to invest around £500 million in the venture themselves, with Infracapital supplying 80 percent and TalkTalk, which intends to raise £200 million by selling shares, the remaining 20 percent.

In total, they hope the venture will unlock £1.5 billion of investment.

At this stage, it is not clear who will lead the new business, when it will be set up by nor when it hopes to complete the build out.

Similar to Vodafone’s recent deal with CityFibre, TalkTalk and Infracapital said they planned to focus the new network on mid-sized towns and cities in the UK.

The company already has a joint venture with CityFibre in York, where the two companies have been deploying FTTH since 2014.

Once built, TalkTalk will act as a wholesale customer of the new company and sell pure fibre broadband to its subscribers.

TalkTalk Executive Chairman Charles Dunstone said: “By signing heads of terms with Infracapital we are making good progress towards putting TalkTalk at the heart of Britain’s fibre future by building a full fibre network, bringing faster, more reliable internet to millions of homes and businesses.”

[Read more: Openreach pledges FTTP for one million more UK homes by 2020]

The announcement came as TalkTalk revealed it had added 89,000 fibre customers to its existing base in the three months to 31 December, up from 74,000 in the same period last year.

Overall, the operator added 37,000 customers in the quarter, the highest number of net additions for almost three years.

Allied to a churn rate that has fallen from 1.6 percent to 1.3 percent during the past 12 months, this pushed revenues – excluding carrier and off-net sales – up one percent to £388 million.

TalkTalk CEO Tristia Harrison said: “The outlook for next year is positive.

“We will see stabilising ARPU and strong customer growth consistent with FY18.

“We expect EBITDA growth of 15 percent, driven by the benefits of a bigger base, lower wholesale charges and significant cost reduction as we continue to radically simplify the business.”

Read more: TalkTalk opts to resell O2 UK mobile services

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