By Mark Kleinman, City editor A new ultrafast broadband network backed by Goldman Sachs is vying to take over a rival venture set up by TalkTalk, the FTSE-250 telecoms group. Sky News has learnt that CityFibre, which is part-owned by the Wall Street giant, is among a small number of bidders battling to take control of FibreNation, which wants to build fibre connections to 3 million UK homes. The entry of CityFibre into the FibreNation fundraising process underlines the land-grab taking place for share of a market given added impetus by Boris Johnson's pledge to see full-fibre broadband in place across the country by 2025. Industry sources said that competition to partner TalkTalk in the rollout of FibreNation had intensified in recent weeks. One said that around three parties, including other infrastructure funds, remained in discussions with TalkTalk and its advisers at the investment bank Lazard. The terms of CityFibre's proposal were unclear on Wednesday. Announced in February 2018, TalkTalk planned to fund 20% of the new venture, with Infracapital, a fund backed by the insurer Prudential, providing the majority of the capital. However, the discussions with Infracapital stalled amid a dispute over the valuation of TalkTalk's existing full-fibre network in York. One insider said that CityFibre had proposed to TalkTalk that it acquire 100% of FibreNation, with the telecoms group receiving a cash payment and signing an agreement to be a customer of the business. Both CityFibre and FibreNation are among a string of independent companies set up in the last two years to join the race to deliver full-fibre communications to British homes and businesses. For the Goldman-backed venture, acquiring FibreNation would provide additional customer volumes to its business. CityFibre has struck an agreement with Vodafone to be its first ISP customer, and has set a target of connecting 5 million homes by 2025. The broadband venture was acquired by Antin Infrastructure Partners and West Street Infrastructure Partners, a Goldman-managed fund, in June last year. It has outlined a £2.5bn investment programme to meet its target, and late last year announced a £1.12bn debt package from banks including Deutsche Bank, Lloyds Banking Group and NatWest, part of Royal Bank of Scotland. Like other new competitors, CityFibre has been set up to seize market share from Openreach, the BT Group subsidiary which now operates on a more arms-length basis from its owner. Liberty Global, the owner of Virgin Media, is in the process of establishing a new joint venture in order to compete in a more expansive way in the broadband market. A number of smaller players, including Hyperoptic and Gigaclear, have also been set up, leading analysts to question how many of the new companies are likely to be financially successful. BT, meanwhile, has signalled that it may cut its dividend in order to fund the huge investment required to accelerate full-fibre broadband provision. The possible reduction to shareholders' payout will be among the biggest calls made by Philip Jansen, BT's new chief executive, and his colleagues on the board. The prime minister has made a comprehensive rollout of ultrafast broadband a cornerstone of his pitch to voters. His chief business adviser is Andrew Griffith, the former chief financial officer and chief operating officer of Sky News' immediate owner, Sky. Nicky Morgan, the new culture, media and sport secretary, is understood to be planning to meet industry bosses in the coming weeks to discuss the government's plans. CityFibre and TalkTalk both declined to comment on Wednesday.
CityFibre has reportedly made an offer to buy FibreNation. The Goldman Sachs-backed broadband network is among a small number of bidders battling to take control of the TalkTalk subsidiary. A source close to the situation told TechCrunch that Goldman’s bid was for “less than half of” what it had initially offered in January.