Leading digital transformation – An interview with trailblazing CityFibre CEO Greg Mesch

Mesch acquired CityFibre in 2011 and from a standing start became largely responsible for driving the UK’s Digital Britain agenda despite being told by detractors his business model was economically impossible to sustain. This makes his story as much about perseverance and tenacity as driving the roll out of digital infrastructure. And to provide another slap in the face of naysayers, in September CityFibre smashed the record for a fibre deployment capital raise with £1.125 billion financing. In more big news the company announced today that it has extended its relationship with Vodafone in another transformational deal. 

"Four years ago we agreed a partnership with Vodafone to anchor a roll out of fibre to the home across 12 cities, and worth £500 million to us," stated Mesch. "Vodafone operated well across those cities and won twice the market share working with us. It has now expanded across our eight million premises footprint and given us a minimum volume commitment that's worth billons in committed service revenue.

"Vodafone decided to help us expand across 35 per cent of the UK, 285 cities, and gave us a commitment that allows us to anchor a national network connecting all of our facilities. This means we can bring Ethernet services and innovative business products across our entire backbone at better economics. That's the supercharge we're bringing to the UK. This is a huge milestone for the company." 
 
CityFibre's journey has been based on anchored contracts with service providers. "We do not exist at a retail level, but what you will see next year is much more activity because we have more financial horse power, giving more help to channel partners to help them succeed," added Mesch. "All of our contracts have been in support of the channel that desperately needs change. Last month we had 33 cities live and 16 consumer ISPs purchasing in the neighbourhood of 10,000 connections."

When you consider CityFibre's early days and its detractors, few can argue that the company is special. It began when Mesch was looking at the European landscape for the best spot to develop and deploy a large scale fibre roll out – and opted for the UK. "CityFibre was founded on a distressed acquisition - for a pound," explained Mesch. "From that pound, in September we announced a fund raising of £1.1 billion and a market cap of £2.3 billion - it's been a heck of a journey." 

The regulatory framework of the late 1990s created an environment where everyone became dependent on BT, and developed a retrenched significant infrastructure provider in Openreach. "That super dependence on Openreach meant that if you built a wholesale dedicated fibre provider able to get scale then you could shift the revenue streams into a network with superior products and better economics," added Mesch. "That's what a challenger does." 

Mesch is the youngest of five boys and when growing up was knocked down relentlessly. "The only thing I was ever taught was to stand back up and say I won," he added. "I have purposefully put CityFibre into a mode of being a David against the Goliath - it's an easy metaphor for everyone to understand and it puts CityFibre in a challenger role.

"The UK desperately needed to get full fibre. It was so obvious. I had been working in Ireland where we built a big fibre network that was purchased by BT Ireland. And after building a fibre network in Germany and The Netherlands it was clear that the UK was falling behind in deploying core fibre infrastructure into cities. Outside if the M25 those cities were going down and down."

A challenger also lives close to the wind. "I put myself on the line financially and emotionally," stated Mesch. "To some degree this was not the best career choice as I was doing well and could have easily done something else. But taking on this task became a passion and a labour love. I'm more excited about the next ten years than the previous ten."

His career in a nutshell has been building companies and challenging incumbents, and in each of those cases Mesch developed successful organisations. "We feel passionately that the UK can have the finest digital infrastructure in the world, but it's going to be the spark of competition that delivers this. What we have done is shake up an incumbent mindset. The fundamental aspect of CityFibre is to think, act and move differently, and be innovative. The one weapon we will always have is our speed of decision making and speed of execution - nobody can take these from us. We are a small company at heart."

Mesch feels for early stage companies and start ups because the raising of money is so difficult and puts an onerous burden on management and executive teams. "In the first five years we lived in the Land of No - investors saying no," said Mesch. "We lived in that world for so long but stuck with it. For the latest £1.1 billion financing I only did two presentations. The dynamics have changed but we are the same company, young, scrappy, with executives that have been in place for ten years.

"Nobody thought you could build up a company to compete with BT. The belief system was embedded in the UK that it couldn't be done. But it can be done because of that super dominance. We have 2,000 workers and over 4,000 that are mobilised though construction firms - so around 6,000 operatives building infrastructure across 60 cities."

CityFibre showed perseverance against sever pressure - and it's not over yet. "Some quarters. don't want a third national network to emerge because it will take market share," added Mesch. "So they are doing everything in their power to stop that and we require partners to support us otherwise we won't exist. It's a simple symbiotic relationship and we need to help each service provider on our network and find ways to make them succeed. We are looking at innovative products on the business side – half the economics for ten times the speed."

CityFibre is across 60 cities today with 85 in sight. Three years ago it delivered hardly any fibre to the home but its already past one million homes for channel partners to consume. "We are building simultaneously across 60 cities and will fully interconnect all of those cities with a different layer of access capabilities - we can build an access network across all of our footprint and we will be able to provide FTTP to businesses and homes seamlessly," commented Mesch. "The next three to five years will see the unfolding of a lot of hard work. We installed just over 10,000 customers lin October, we'll see that go to 15,000, to 20,000 to 30,000 circuits being delivered. That will create a real change. What we are talking about is gigabit speeds for £30 a month - that's the future."

Aside from attractive commercials fibre brings reliability, sustainability and consistent service levels. "Full fibre unleashes the potential of the Internet and applications," added Mesch. "High speed Internet activity whether in home or office can really aid productivity of the mind. We are a service based economy in the UK so we do not need more roads, airports and railways. What we need to power the UK economy is a world class digital infrastructure. That will increase the GDP." 

According to Mesch, the many fibre companies that have emerged is a testament to what is possible when you think outside of the box. This approach is perhaps attributable to an engineering mindset. "I'm passionate about engineering," stated Mesch. "I'm an engineer at heart, by background and education. But we've moved away from engineering being a proud a discipline. We are naming our fibre exchanges after the great engineers in the UK. The engineering depth in the UK is second to none, yet we are producing less engineers now than many other countries.

"Our CFO and COO are engineers. We try and push engineering disciplines because we want to leave a legacy - the finest digital network in the UK that will force revolutionary change. My passion is to get more engineers and more women engineers introduced to CityFibre. I'm passionate about diversity in that field. This industry is mainly white older men. That is not going to create the innovation, the change and diverse thinking and culture that we need to move forward."

The green dividend is also key, and Mesch believes that full fibre across every city amounts to a boon for UK sustainability, citing carbon reduction from the removal of maintenance vans supporting old, corrosive, metal and power-based high maintenance networks with an electricity consumption up to 20 or 30 times more than fibre plans. "We completely eliminate all of that infrastructure," said Mesch. "There is no electronics in the field whatsoever. Fibre has no touch. We need the whole country to adopt that."