Hyperoptic Ltd, a UK fiber-to-the-premises (FTTP) overbuilder, which is backed by KKR’s Global Infrastructure Investors III fund, today announced that its fiber network has reached over 750k homes and businesses across the UK. Furthermore, by year-end 2023, Hyperoptic has set a target for its fiber network to pass 2 million homes, implying an incremental 1.25 million passings over the next 22 months – and inferring a build pacing of ~57k premises per month.

Hyperoptic – KKR Supports UK Fiber Network Expansion

Hyperoptic’s fiber network reaches 57 towns and cities primarily in Greater London, UK, where the company focuses exclusively on high-density urban areas. For example, the company connects building types including multi-dwelling units (MDUs), offices, existing developments, and new build homes.

In terms of service, Hyperoptic states that its top average speed is 900 megabits per second (Mbps) which is achieved through a wired connection for subscribers on its 1Gb package.

Partnerships

Hyperoptic speeds up its fiber network growth through a partnership model. To-date, 50+ UK councils, 250+ developers, as well as UK homebuilders, including Barratt Homes, CALA Homes, and Avant Homes have partnered with Hyperoptic.

Barratt Homes

Barratt Developments, a UK homebuilder, partnered with Hyperoptic (as well as Openreach and Virgin Media) to install fiber broadband infrastructure across its new developments throughout the UK. In turn, Barratt’s customers will have 18 internet service providers (ISPs) to choose from, one of which is Hyperoptic.

Hyperoptic Partnership with Barratt

Customers

Presently, Hyperoptic serves over 230k customers in the UK with its fiber-to-the-premises (FTTP) service, implying a ~30% penetration rate. Additionally, the company aims to maintain a penetration rate of at least 30% where its fiber network is over two years old.

Financials and Employees

For the year ended December 31, 2020, Hyperoptic generated revenue of £51.7m ($70.2m USD) and EBITDA of -£12.2m (-$16.5m USD). Additionally, as of December 31, 2020, Hyperoptic had tangible fixed assets, at cost (i.e., pre-depreciation), of £229.7m ($311.8m USD), which primarily consisted of network assets and physical infrastructure access.

In November 2019, Hyperoptic secured a £535m, 7-year committed senior debt facility package from NatWest. Specifically, Hyperoptic received a £500m CapEx facility and a £35m revolving credit facility, at pricing of LIBOR + 3.5% margin. As of December 31, 2020, the company had drawn on £321m of this debt financing.

Finally, as of December 31, 2020, Hyperoptic had 1.25k employees (presently 1.4k+), of which 748 (~60%) were network and field technicians.

Competitors

Overall, only 28% of the UK has access to 100% fiber-based broadband services. While Hyperoptic is aiming to increase the UK’s access to fiber, so are its key competitors, which are CityFibre, Community Fibre, and G.Network. Below are further details on each of these competitors and their plans:

  • CityFibre: backed by Antin Infrastructure, Goldman Sachs (West Street), Mubadala, and Interogo (IKEA). Presently, CityFibre passes 1+ million homes with fiber and has a target of passing 8 million homes and 800k businesses by year-end 2025
  • Community Fibre: backed by Warburg Pincus, DTCP, Amber Infrastructure, and RPMI Railpen. Presently, Community Fibre passes 435k homes & businesses with fiber and has a target of passing 2.2 million homes and businesses in London by year-end 2024
  • G.Network: backed by Cube Infrastructure and the Universities Superannuation Scheme (USS), a UK pension scheme. Presently, G.Network passes 300k+ premises with fiber and has a target of passing 1.4 million homes and businesses by year-end 2026
Jonathan Kim covers Fiber for Dgtl Infra, including Zayo Group, Cogent Communications (NASDAQ: CCOI), Uniti Group (NASDAQ: UNIT), Lumen Technologies (NYSE: LUMN), Frontier Communications (NASDAQ: FYBR), Consolidated Communications (NASDAQ: CNSL), and many more. Within Fiber, Jonathan focuses on the sub-sectors of wholesale / dark fiber, enterprise fiber, fiber-to-the-home (FTTH), fiber-to-the-premises (FTTP), and subsea cables.

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