CityFibre: £3.8bn bet on the verge of paying off or sunk cost fallacy taken way too far?

 CityFibre, the plucky upstart which grew, very quickly, to become the UK’s largest independent full-fibre (FTTP) network provider, is now seemingly fighting for its life while holding some of the largest European Banks at gunpoint. The Goldman Sachs- and Mubadala-backed altnet racked up £3.8 billion in debt over the past five years, including from the UK Treasury-backed National Wealth Fund (NWF), but it is not generating enough revenue to even cover the interest payments. The rumoured solution? Ask the debt providers to write off some of their tickets – up to £500 million each for a few of them – and become equity owners. They would also have to excuse future interest payments to allow CityFibre to raise further debt to expand its reach through consolidation. “The request is almost unthinkable not just for the sector but for commercial banking in general,” a banker added. “They don’t have a way out though; the only way is down. It may not end with them part-owning an altnet (alternative network provider), but whatever the end result is won’t be pretty for them.” A first-of-its-kind debt deal and a gaggle of banks looking for a decent return and an exit within seven years turned into an impossible situation which cost them their jobs.