the times | Saturday October 17 2020 1GM 55
The ManifestoBusiness
TIMES PHOTOGRAPHER RICHARD POHLEGreg Mesch said Cityfibre had defied the sceptics who thought it would be unable to compete with big players such as BT
I
t was in Milton Keynes, the first
place Cityfibre began building its
full-fibre broadband network,
that the infrastructure company
ran into problems. A series of
inspections, ordered by the local
authority in response to complaints,
found examples of “poor practice”
such as cables not being laid deep
enough in the footpath.
Almost a year later Greg Mesch, its
American chief executive, is in the
Buckinghamshire town as Cityfibre
approaches the completion of its two-
year project to enable the connection
of 80,000 premises to the faster
broadband network.
Milton Keynes is now among more
than 100 urban locations — covering
eight million premises and about
30 per cent of the population, from
Peterborough to Stirling — that
Cityfibre aims to connect by 2025.
The rapid growth has been
underpinned by anchor tenant
agreements with Vodafone and more
recently Talktalk, the internet service
providers. Negotiations continue for
other companies to access Cityfibre’s
emerging network in order to retail to
households and businesses.
Cityfibre’s target is a significant part
of the government’s own, separate
2019 election campaign pledge to
deliver “full fibre and gigabit-capable
broadband to every home and
business across the UK by 2025”.
Full-fibre broadband, which runs all
the way from the exchange to the
home, is still only available to 14 per
cent of UK homes, compared with
about 80 per cent in some countries,
such as South Korea and Japan.
Policymakers in Britain are
belatedly seeking to catch up, to “level
up” the country by reducing regional
disparities and to power the digital
economy. The prospects of Boris
Johnson hitting his government’s
commitment, though, have been
called into question in recent weeks
by the telecoms industry, which is
also seeking to overcome internal
challenges and disagreements.
BT, the former state monopoly and
owner of Openreach, the country’s
incumbent broadband infrastructure
network, is investing £12 billion
upgrading its slower, copper wires to
full-fibre to cover 20 million premises
by the mid-to-late 2020s. BT has
warned that without policy changes
nationwide “gigabit” speeds will only
be delivered by 2033.
Meanwhile, the Social Market
Foundation think tank, in a report
sponsored by Talktalk, warned last
week that there was a “mountain to
climb” to reach universal coverage in‘Full-fibre is
not a luxury
any more. It’s
a necessity’
Cityfibre’s boss has no
time for faint hearts
as he helps to provide
Britain’s digital upgrade,
writes Alex Ralph
time and the National Audit Office
said this week that the target was
“challenging” and warned that rural
areas risk being further left behind.
Mr Mesch, 60, said that Cityfibre’s
own 2025 target predated the
government’s but it could still help
ministers hit theirs.
“We want to be done as quickly as
possible because that’s the greatest
way to make the return on your
invested capital,” he said. “So we have
a natural incentive to go as fast as we
can because we have anchor
contracts [with Vodafone and
Talktalk] that pay us as we build.”
That in turn “will result in others
going fast”, he said.
“Initially people thought that the
manifesto target was aspirational. I
don’t think it’s a luxury any more, I
think it’s a requirement of the UK.
The UK needs a world-class digital
infrastructure and I don’t know why if
we all worked together we couldn’t
achieve that target.”
Mr Mesch was talking from
Cityfibre’s Milton Keynes office this
week — a floor of empty desks. The
majority of Cityfibre’s 1,200 workforce
have been working from home since
the pandemic struck, but the
company’s sub-contractor engineers
have continued to build the network
across the country.
The surge in demand for fast
download and upload speeds to work
at home in response to the
government’s lockdowns and social
restrictions, such as to access apps
like Microsoft Teams and Zoom, has
made full-fibre “even more critical”,
Mr Mesch believes. “I think you’ve
seen a double effect in the UK, which
is... going through a historical event
of Brexit needing to be more
competitive, and now a pandemic. So
I think the alignment for the country
has never been better.”
He attended an industry event in
Whitehall in March, with ministers
and fellow telecoms industry chief
executives, shortly before the national
lockdown and days before Philip
Jansen, BT’s chief executive, tested
positive for coronavirus. The event
was to discuss rural connectivity and
there are concerns that remote areas
will be left behind by the more
profitable towns and cities. The
government has pledged £5 billion
of support to encourage
investment in rural
areas. Companies
have been
pressing
ministers for
details.
Cityfibre is
seeking to
access that
fund with a
view to
extending its
full-fibre
connections from
its urban hubs into
the surrounding
countryside. Talks withofficials and
regulators continue
but Mr Mesch is
confident that
Cityfibre can extend
into those parts by
2025.
The bullish attitude
was forged by the first
five years of “living in
the land of no”.
“Everywhere we went, people
said, ‘No, you can’t do that’. Itstarted with, ‘No, this country doesn’t
need fibre’. Then it went, ‘No, you
can’t compete with BT Openreach.
No, you can’t get big enough for the
big service providers to use you’. So
we lived in a period of no for so long
that it hardened us.”
Mr Mesch said that Cityfibre had
succeeded in “derisking the model”. It
has secured contracts worth almost
£5 billion to expand a network costing
closer to £4 billion, is defying a “large
degree of scepticism” it could be builtfast by a “small company” and has a
partner in Bechtel, the US
construction management company,
to help guide the project.
The acquisition of Cityfibre for
£538 million by Goldman Sachs’s
West Street Infrastructure Fund and
Antin Infrastructure Partners in 2018
also gave Cityfibre the firepower to
expand quickly.
As well as a possible future initial
public offering, Cityfibre is also
anticipating consolidation in the fibre
market. There has been an influx of
capital into so-called alt-nets
(alternative network providers).
Oaktree Capital Management agreed
in September to pay £100 million for a
majority stake in Zzoomm, a small
telecoms company, and KKR last year
acquired Hyperoptic, an urban fibre
company, in a deal that valued the
company at £500 million.
Cityfibre was built on five
acquisitions, including most recently
January’s £200 million purchase of
Talktalk’s Fibrenation, a fledgling
fibre infrastructure company in
Yorkshire, which included the
nationwide supply deal.
Over the next five years
consolidation is expected to lead to a
third national network emerging to
compete with BT’s Openreach and
Virgin Media’s cable network.
“Whether Cityfibre ultimately
acquires the others or the others
acquire Cityfibre, we think will all
come together some day,” Mr Mesch
said. Asked whether Cityfibre will be
the consolidator, he says: “I don’t
mind, either way... Cityfibre is
leading the charge to show what
competition can bring.”Q&A
Who is your mentor?
Dwight Moorhead, my
first chairman, who
helped me when I
started my second
company at 26. He
taught me that “hope” is
not a strategy. It’s been
that foundation I have
built upon ever since.
Does money motivate
you?
No. Overcoming what
others believe can’t be
done motivates me.
What was the most
important event in
your working life?
At 33, I took a huge risk
and accepted a
consulting contract
to move to
Ireland fromColorado. I then met
and married my wife,
Niamh. We have three
children and have lived
in Europe ever since.
Which person do you
most admire?
James Dyson, Isambard
Kingdom Brunel, Steve
Jobs, Elon Musk; all
leading engineers with
vision and tenacity.
What is your favourite
television programme?
Salvage Hunters, The
Crown, below, and Star
Trek: The Next
Generation.
What does leadership
mean to you?
Successfully coaching a
team that everyone
thinks has no chance of
winning to the
championship.
How do you relax?
Long walks with my
wife and our dog.CV
Born: January 16, 1960
Education:
Mathematics and
computer science
undergraduate degree,
University of Colorado;
Masters of Business
Administration, Denver
University.
Career: 1982 partner,
Cypher Systems,
Denver; 1986 chief
executive, Novanet,
Denver; 1993 chief
operating officer, Esat
Telecom, Ireland; 1998
president and chief
operating officer,
Versatel Telecom,
Netherlands; 2011
founder, Cityfibre
Family: Married to
Niamh, three childrencourage
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