£15m North Yorkshire Tender Secured

RNS Number : 6758H
Bigblu Broadband PLC
07 December 2020
 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 ("MAR"). Upon the publication of this announcement, the inside information is now considered to be in the public domain for the purposes of MAR.

 

Bigblu Broadband plc

('BBB' or the 'Company' or the 'Group')

 

£15m North Yorkshire Tender Secured 

 

· To receive £12.3m Subsidy from the North Yorkshire Local Authority  

· Four Broadband Grants Won This Year Valued at Over £27m

· Quickline to Target 100k Premises

 

Bigblu Broadband plc (AIM: BBB.L), a leading provider of alternative super-fast and ultra-fast broadband services, announces that its subsidiary Quickline Communications Limited ("Quickline") has won a further competitive tender to provide significantly improved broadband speeds to premises across North Yorkshire that are unable to access fast and reliable internet connectivity.

 

On behalf of the North Yorkshire Local Authority (the "Authority") and NYnet, the Authority's wholly owned high-speed connectivity provider, Quickline will extend its network using its fibre-backed fixed wireless technology to a further 15,830 premises in rural areas to connect to superfast*, ultrafast** and in some cases gigabit speed broadband services. The contract provides for a total network investment of £14.5m, leading to significantly faster broadband speeds in the more isolated areas of North Yorkshire.

 

The programme will receive a subsidy of £12.3m from the Authority in partnership with the Government's broadband delivery programme, Building Digital UK ("BDUK"). Quickline is committing £2.2m of network investment to support the roll-out and deliver and maintain the new infrastructure.

 

Given the limited connectivity currently available in the contracted areas, Quickline expects to see strong take-up of broadband services, further increasing its addressable market and customer base. Quickline also expects to deliver at least its targeted return on capital of c.15% over the life of the contract.

 

Quickline is focussed on delivering improved broadband connectivity in the rural areas of Northern England, where a significant digital divide remains and hundreds of thousands of premises are in need of increased broadband speeds. Quickline's heritage is fixed wireless but its network includes increasing amounts of fibre connectivity.  Its aim is to be the leading UK dedicated rural broadband infrastructure provider, delivering innovative, flexible and hybrid solutions that can address the millions of premises unlikely to be served commercially by full fibre networks for many years to come.

 

Four BDUK contacts secured, 5G DCMS Grant, Rural Gigabit Vouchers to target 100,000 premises

 

This is the fourth tender won by Quickline in quick succession under the BDUK Superfast Programme and follows a long period of engagement with both local authorities and BDUK regarding how best to improve connectivity in deep rural communities. Today's announcement follows a £9.1m contract, £7.6m subsidy, awarded by the Combined Authority of West Yorkshire, a contract for up to £8.1m of network investment with up to £6.1m of subsidy in Lincolnshire and a £1.8m contract, £1.4m subsidy awarded by the North Lincolnshire local authority. In addition, Quickline was selected by the DCMS in February 2020 to lead a £6.0m 5G project to boost rural connectivity in North Yorkshire.

 

The four contracts represent an opportunity to provide significantly improved network connectivity to over 32,000 premises within Quickline's current footprint using both fibre and fixed wireless technologies. Quickline will make a combined network investment of up to £33.5m to pass these premises with up to £27.4m funded via subsidies and £6.1m to be invested from Quickline's own resources. Quickline will also invest further capital in scaling up the organisation, sales and marketing capability and connecting customers.

 

The subsidies received are deferred as capital grants and recognised as other income over a four-year period, partly offsetting increased depreciation charges as the network investment is increased. This will, over time, boost Quickline's reported revenue and EBITDA as its customer numbers grow and associated revenues and profits develop.

 

Finally, Quickline is already an approved supplier of Rural Gigabit Vouchers, which provide funding for up to £1,500 per residential premise and £3,500 per business premise for new gigabit-capable connections in rural areas, and is quickly ramping up its infrastructure build via this programme. Through a combination of its current footprint, the four tenders and Rural Gigabit Vouchers, Quickline sees scope to target over 100,000 premises.

 

Steve Jagger, CEO of Quickline commented: "We are thrilled to continue being part of connecting North Yorkshire in this fourth phase of rolling out Next Generation Access (NGA) superfast broadband.  Everyone in the UK should have access to high-speed internet no matter where you live or work and this contract means that up to 97 per cent of all homes and businesses in the county will now have that ability to access Superfast broadband and in most cases Ultrafast broadband.

 

"This year, more than ever, we have seen how important it is to have online connectivity, giving people the ability to work remotely and to stay connected to family and friends, reducing isolation for many."

 

Andrew Walwyn, Chief Executive Officer of Bigblu Broadband, commented : "The scale of this latest win highlights the potential for Quickline to exceed initial expectations. As and when roll out, and more importantly delivery, commences in earnest we will see strong customer growth and the resultant impact on profitability. In addition to competing for new tenders we are excited by the potential impact of more government funds being utilised on existing grants."

 

Funding

 

The speed and scale of the roll out remains in line with management expectations following the initial delays caused by Brexit and COVID-19. The £12m funding secured by Quickline in August 2019 has afforded it the flexibility for it to tender for these capital-intensive contracts with this latest contract underpinning Quickline's initial 30,000 subscriber target, with scope for further growth beyond as it seeks to target 100,000 premises.

 

The £12m funding comprised £8m of potential new equity and a £4m revolving credit facility provided by HSBC. £7.75m of the equity was provided by certain funds managed by Harwood Capital LLP (whose funds also hold a 26.4% stake in Bigblu) and £0.25m was provided by Paul Howard (the Chairman of Quickline and a Non-executive Director of Bigblu). Of the £8 million equity, £4m was invested in August 2019 and £2m was invested in October 2020 when the West Yorkshire, Lincolnshire and North Lincolnshire contracts were announced. 

 

With the North Yorkshire contract now in place and Quickline's investment in network development progressing, Quickline will now draw down the final £2m equity commitment. This will leave a balance of £4m of debt available for Quickline to draw upon. With this final £2m equity drawdown, Bigblu's shareholding in Quickline will be 56.9%. BBB will continue to fully consolidate Quickline in its accounts whilst recognising the associated minority interest.

 

Significant Government Support Ongoing

 

BDUK's £1.7bn Superfast Broadband Programme is being phased out although new contracts can be signed before the end of December 2020 and supported through to 2026. Going forward, BDUK is adopting an "Outside-In" approach funded by the Chancellor's £5bn commitment to fund gigabit capable deployment in the hardest to reach 20% of the UK.

 

The "Outside-In" approach has two main elements: a Rural Gigabit Voucher Scheme and a Dynamic Purchasing System. Quickline is already an approved supplier and beneficiary of the Voucher Scheme, which provides up to £1,500 per residential premise and £3,500 per business premise for new gigabit-capable connections in rural areas. Quickline will continue to build new network where these vouchers are available.

 

The Dynamic Purchasing System (DPS) is expected to be introduced in April 2021 and allows infrastructure providers to bid for funding to roll-out gigabit-capable networks to underserved regions. Quickline is part of the industry consultation into this scheme, which is yet to be finalised. However, it is understood that the hardest to reach areas will be divided into lots with an average size of around 3,000 premises and an average subsidy of around £1,000 per premise passed. Quickline is already registered on the scheme and will consider lots as they become available.

 

Finally, we recognise the importance of gigabit capable networks and the role that full fibre plays in delivering them. However, it is worth noting that in many rural areas of the UK, full fibre will remain too expensive and challenging to deploy even with government support. Quickline's  5G DCMS backed project in North Yorkshire is helping increase understanding as to how 5G enabled fixed wireless could provide a gigabit solution that is both much faster and less costly to deploy.

 

*Superfast defined as broadband speeds in excess of 30Mbps

** Ultrafast defined as broadband speeds in excess of 100Mbps

 

For further information:

 

Bigblu Broadband Group PLC

www.bbb-plc.com

Andrew Walwyn, Chief Executive Officer

Frank Waters, Chief Financial Officer

Dom Del Mar, Corporate Development

 

Via Walbrook PR

finnCap (Nomad and Broker)

Marc Milmo / Simon Hicks / Charlie Beeson (Corporate Finance)

Tim Redfern / Richard Chambers / Manasa Patil

(ECM)

 

Tel: +44 (0)20 7220 0500

Walbrook PR (PR / IR advisers)

Tel: +44 (0)20 7933 8780 or

Nick Rome/Tom Cooper/Nicholas Johnson

BigbluBroadband@walbrookpr.com

 

About Bigblu Broadband plc

 

Bigblu Broadband plc (AIM: BBB), is a leading provider of alternative super-fast and ultra-fast broadband solutions throughout Australia, the Nordics and parts of the UK. BBB delivers a portfolio of super-fast wireless broadband products for consumers and businesses unserved or underserved by fibre. The Group has a significant target market with 3m customers in the territories we operate in with speeds of under 4 Mbps.

 

High levels of recurring revenue, increasing economies of scale and Government stimulation of the alternative broadband market in the countries we operate in provide a solid foundation for strong organic growth as demand for alternative super-fast broadband services increases in the territories we operate in. 

 

Acquisitive and organic growth enabled BBB to grow rapidly since inception in 2008 during which time the Company completed 21 acquisitions across nine different countries. In September 2020, BBB concluded the sale of its UK and European Satellite business to Eutelsat, offering an excellent return for shareholders. With the remaining businesses -   consisting of its Australian operations (Skymesh Pty Limited), its majority interest in Quickline (QCL Holdings Limited) and its Nordics business (Bigblu Norge AS)   , BBB is extremely well positioned to continue growing as it targets customers that are trapped in the 'digital divide' with limited fibre broadband options.

 

BBB continues to provide customers significant ongoing services in the territories present including hardware supply, installation, pre and post-sale support billings and collections, whilst offering appropriate tariffs depending on the requirements of each end user in each territory. BBB's range of solutions includes satellite, next generation fixed wireless and 4G/5G delivering between 30 Mbps and 150 Mbps for consumers, and up to 1 Gbps for businesses.

 

Importantly, as core technologies evolve, and more affordable capacity is made available, BBB continues to offer ever-increasing speeds and higher data throughputs to satisfy market demands for 'video-on- demand'. Its alternative broadband offerings present a customer experience that is similar to that offered by wired broadband and the connection can be shared in the normal way with PCs, tablets and smart-phones via a normal wired or wireless router.

 

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