The combined authority told the target company in March it would recommend CityFibre to the competition regulator, the Sunday Telegraph reports, while sources close to Mr Burnham say he was not personally involved
Greater Manchester’s combined authority backed a bid by CityFibre to buy the business broadband firm Substantial in March, when Andy Burnham was the region’s mayor, the Sunday Telegraph has reported. CityFibre is part-owned by Mubadala, the Abu Dhabi sovereign wealth fund whose chief executive, Khaldoon Al Mubarak, is chairman of Manchester City. Insiders insist Mr Burnham, now Prime Minister, was not personally involved in the decision. The authority says it backed CityFibre because of the value it would offer residents, not because of who owns it.
What the authority said
According to the Sunday Telegraph, officials from the Greater Manchester Combined Authority (GMCA) told Substantial executives in March they would recommend CityFibre to the Competition and Markets Authority (CMA) as the preferred buyer. In a statement, the GMCA said its aim was “the best possible value for our residents”. It added: “Informed by our publicly available policy documents, and consistent with the CMA’s interim findings, we are supportive of any operators in the market who will increase competition, improve resilience and keep prices low. We believe that having at least three providers of broadband infrastructure operating in residential areas will maintain this.”
Mubadala is one of CityFibre’s three biggest shareholders and has committed at least £800m to it: an initial £500m and a further £300m announced in March 2022. CityFibre said its latest results show the “ongoing, fundamental strength” of its business, with an extra £900m committed and growing customer numbers. That £900m is a proposed investment from several shareholders, including Goldman Sachs, Antin Infrastructure Partners and Interogo as well as Mubadala, according to Reuters, so it is not all new UAE money.
The regulator’s position
The CMA has not approved CityFibre’s purchase. Its inquiry is into a rival £2bn bid by Nexfibre, jointly owned by Liberty Global and Telefónica, the owners of Virgin Media O2. In an interim report last month, the regulator provisionally found that Nexfibre’s takeover could substantially weaken competition in wholesale broadband. It expects CityFibre to acquire Substantial if that deal fails. It said it had received “a large number of submissions” raising concerns.
The inquiry formally began on 23 April and was referred straight to a full Phase 2 investigation on 1 July, so the March contacts predate it. A consultation published on 20 October raised prohibition as a possible remedy, and comments closed on 27 October. The final decision is due by 15 December.
Nexfibre has called the interim report “fundamentally flawed” and questioned CityFibre’s “financial viability”. Its owners have declined to offer remedies, saying the CMA’s assumptions about a CityFibre takeover are unrealistic. Nexfibre says buying Substantial would unlock £3.5bn of investment and create a bigger challenger to BT Openreach.
CityFibre’s finances are a key part of that argument. Industry reports put its debt at around £3.8bn, and The Times reported a pre-tax loss of £545m. Reports in October said it had asked lenders to accept potential losses of up to £2bn through a debt restructuring, with no sign yet that creditors have agreed. The CMA’s provisional view was that CityFibre could probably raise the funds. CityFibre reported nine-month revenue of £164m, up 36%, and adjusted EBITDA of £60m, up from £15m a year earlier, in unaudited figures.
The political row
The report adds to scrutiny of Mr Burnham’s links with Manchester City. He said he would be “really concerned to lose” the club’s UAE owners after it was found to have systematically broken Premier League financial rules over a decade, and called the Emiratis “a huge partner in the building of modern Manchester”. He has since been accused of misleading the public, after dinners and complimentary tickets were reported as not having been disclosed despite his pledge to reveal “everything that I have done” relating to the club while mayor. The source does not include a response from him.
Shadow sports minister Louie French said the latest report raised “fresh concerns about Andy Burnham’s time as Mayor of Greater Manchester and his cosy relationship with the owners of Manchester City”.
