UK's Gigaclear Gets £111M in Funding for Rural Broadband

Broadband player Gigaclear has landed £111 million ($144 million) in additional funding for the rollout of fiber networks in rural parts of the UK.

The new funds come from existing shareholders including Infracapital and Woodford, which are investing £60 million ($78 million) and £15 million ($19 million) respectively, as well as new investor RPMI Railpen, which manages the UK's Railways Pension Scheme and is stumping up about £35 million ($45 million) of the total amount.

While Gigaclear's statement does not indicate precisely where the money will go, a report from the UK's Financial Times newspaper (subscription required) says Gigaclear will use it to connect another 150,000 premises to fiber networks in the counties of Herefordshire, Essex, Devon, Somerset, Northamptonshire and Gloucestershire over the next three years.

Gigaclear's aim is to address rural demand for broadband connectivity and it claims to provide much faster services than fixed-line incumbent BT Group plc (NYSE: BT; London: BTA), which has been upgrading its copper-based networks but resisted making any massive commitments to fiber-to-the-home technology. (See BT Hints at More Widespread FTTP Rollout.)

The company is one of several small infrastructure-based alternatives to BT that have emerged in the last few years. CityFibre is focused on addressing fiber demand in towns and cities outside London, and has partnered with Gigaclear in some areas, while Hyperoptic is targeting multi-dwelling units in cities including Glasgow and Nottingham. (See CityFibre Aims High in BT Battle and Hyperoptic Takes Gigabit to Glasgow.)

While the likes of Sky and TalkTalk compete against BT in the UK's broadband retail market, they rely heavily on the incumbent's own network facilities. That leaves cable operator Virgin Media Inc. (Nasdaq: VMED) as the only infrastructure rival on a national scale.

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Gigaclear, however, is focused on building networks largely in communities that have been ignored by the bigger players. That equals about 1.5 million homes (or 6% of the UK total), according to the Financial Times report, which says Gigaclear's network had passed about 30,000 homes at the end of 2016.

The newspaper also writes that Gigaclear's loss widened from £6 million ($7.8 million) in 2015 to about £10.7 million ($13.9 million) last year on revenues of £3.5 million ($4.5 million), with staff numbers rising from 63 to 141 between 2015 and 2016.

Gigaclear previously raised €25 million ($27 million) during a funding round in January 2016, partly from the European Investment Bank. That came after a funding injection of £30 million ($39 million) in 2015. (See UK's Gigaclear Raises $46M for Rural Gigabit.)

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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