Vodafone UK has signed a wholesale deal with CityFibre that will see up to five million premises connected to FTTH technology by 2025.

Cityfibre will begin construction of the network early next year, with the first premises set to be passed by the end of 2018.

One million homes and businesses are set to be connected by 2021.

The network will initially be focused on 12 unnamed cities where Cityfibre has an existing footprint.

Precise locations will be revealed “in due course” the companies said.

As part of the agreement, Vodafone will have exclusive rights to market FTTH services to customers during the build-out phase.

Dependent on the take up of services from the first one million premises, the agreement could be extended to cover a further four million premises by 2025.

Vodafone said the terms of the deal meant it was getting superior product at a lower cost and with better service conditions to that which Openreach – on which it relies for its broadband service currently – provides.

BT-owned Openreach has committed to building a FTTH network to two million premises by 2020 and said up to 10 million premises could be connected by the mid-2020s.

[Read more: Openreach consultation sets up battle over how UK fibre network will be paid for]

Vodafone CEO Nick Jeffrey said the agreement with Cityfibre did not mean it was closing the door to working with Openreach or any other infrastructure provider.

Cityfibre has 3,200km of fibre across 42 UK towns and cities and has been building a FTTH network in York in partnership with TalkTalk since 2014.

CityFibre Chief Executive Greg Mesch said: “With this commitment from Vodafone, we have a partner with whom we can transform the digital capabilities of millions of homes and businesses and establish an unassailable wholesale infrastructure position across 20 percent of the UK broadband market.”

Read more: FTTH costs are coming down, but Australia provides a reality check

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