Goldman Sachs-backed broadband operator CityFibre is investing £2.5 billion in fibre networks to take on established telecoms players BT and Virgin Media.

CityFibre said the £2.5 billion ($3.25 billion) cash injection would be used to roll out ultra-fast broadband to as many as 5 million homes in 37 towns and cities across the UK including Bristol, Glasgow and Manchester.

The company was acquired by Goldman Sachs West Street Infrastructure Partners (Goldman’s infrastructure investment vehicle) and Antin, a private equity firm for $750 million last year.

CityFibre said its full fibre networks, which offer gigabit-speed services, could account for up to a third of the UK government’s target of signing up 15 million homes to ultra fast broadband by 2025.

The company signed Vodafone as its first ISP partnership deal last year to market its broadband supply in 10 cities including Edinburgh, Coventry and Leeds.

In a statement CityFibre said its fibre-to-the-home builds are currently underway in Milton Keynes, Peterborough and Aberdeen, with construction due to start in Edinburgh, Stirling, Coventry and Huddersfield by the end of the year. Cambridge, Leeds and Southend-on-Sea are to follow shortly afterwards.

Greg Mesch, chief executive of CityFibre said: “Our rollout will soon bring to scale an innovative wholesale network, providing internet service providers and mobile network operators with greater choice and unrivalled technical capabilities, benefitting all sectors of the market.”

Responding to the investment, Jeremy Wright, secretary of state for digital, culture, media and sport said: “Significant investment from new network operators is critical to deliver our ambition for nationwide coverage. Through our Industrial Strategy we’re working with businesses and Ofcom to ensure effective network competition that supports investment on this scale.”

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