Watch out BT? Rival ISP announces plan to build full fibre network to 3 million homes and businesses
TalkTalk intends to build a FTTP fibre network to some 3 million homes and businesses in the UK.
To do this the ISP said it would invest £200m into a joint venture with an infrastructure equity investment firm.
But investors took fright at the decision of a full fibre rollout, as TalkTalk also revealed a profit warning at the same time. Consequently shares in the broadband provider tumbled 16 percent on Thursday morning.
TalkTalk said it will set up a joint venture with Infracapital, the infrastructure equity investment arm of M&G Prudential.
This joint venture will invest up to £1.5bn building the FTTP network, with Infracapital supplying 80 percent of the funding, and TalkTalk the remaining £200m.
But in order to do this, TalkTalk needs to raise £200m from its investors to shore up its balance sheet and fund the fibre rollout.
There is no word on where this new FTTP network will be build, although TalkTalk did say that it intends to “provide full fibre to more than 3 million homes and businesses in mid-sized towns and cities in the UK.”
“It’s 12 months since I announced my intention to take a more active role in the management of TalkTalk,” explained Charles Dunstone, executive chairman of TalkTalk. “Since then, we have reset the business and returned it to quarter-on-quarter customer growth.”
“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.”
“Looking ahead we see real opportunity to continue growing the core business whilst also investing in full fibre,” Dunstone said. “We have therefore strengthened our balance sheet and temporarily reduced our dividend to take full advantage of the opportunities available.”
Last year TalkTalk did warn that going forward it was prioritising fixed broadband growth over profits.
And there is no doubt that the ISP has been shaking things up recently, when it announced last year its intention to exit the mobile market.
Last month TalkTalk said it would offer customers a discounted mobile tariff with partner O2 instead of renewing MVNO contracts.
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