Redcentric has disposed of its metropolitan-area fibre networks in Cambridge, Portsmouth and Southampton to CityFibre Infrastructure Holdings for a total consideration of £5.0m, in line with book value, paid in cash on completion.
As part of the transaction, CityFibre have also acquired unlit network and ducting from Redcentric in Nottingham, Derby, Northampton and Newbury. Redcentric have signed a network access agreement with CityFibre to provide seamless access to the network in support of its customers, who remain with Redcentric and are unaffected by the disposal.
The network access agreement, which has a ten year duration, with minimum levels of annual commitment, which reduce over time.
The expected impact on Redcentric is incremental net cash costs of approximately £0.5m per annum initially, although this is offset by reduced depreciation and interest charges meaning that the transaction is earnings neutral.
The transaction strengthens Redcentric's balance sheet, and provides further flexibility for future investment.