SHARES in CityFibre soared after the company announced a major partnership with Vodafone that will bring fibre connectivity to as many as five million UK homes and create another competitor to BT’s Openreach.

The deal will see around one million homes and businesses across 12 towns and cities connected to the new fibre network during the first phase of development, with construction set to start in 2018 and be “largely completed” by 2021.

The two companies will then have the right to extend their agreement to cover another four million sites across 50 towns and cities by 2025.

Vodafone and CityFibre have not revealed which regions will benefit from the first phase of the project, but said a list would be released over the coming months, with hopes of connecting the first customers by the end of 2018.

It creates another viable competitor to BT’s Openreach, which currently dominates fibre infrastructure across the UK, through Virgin has also emerged as a rival.

Investors cheered the news, sending CityFibre’s AIM-listed shares rocketing 26 per cent, or 11.45p, to 54.7p in morning trading.

Vodafone’s gains were more subdued – up 0.9 per cent or 2.05p at 217.95p.

The wholesale agreement between the two firms gives Vodafone exclusive rights to market broadband services over the network, which will be built, operated and owned by CityFibre.

The first phase of the project is expected to be worth more than £500 million over 20 years, according to the announcement.

The deal will has been welcomed by the UK Government, which has been pushing to increase high-speed internet connectivity across the country. Minister for Digital Matt Hancock said: “We warmly welcome this new partnership between CityFibre and Vodafone as an important step to drive investment and help build a full-fibre Britain.

“Reaching an additional five million premises by the middle of the next decade would be a significant contribution to connecting modern Britain and meeting our manifesto commitments.”

In September, Hancock said the Government was on track to make superfast broadband available to 95 per cent of the UK by the end of this year, and said reinvestments in the network could connect extra homes and businesses from next year.