Oaktree capital management, the fund founded by billionairehoward marks, has agreed to pay 100m for a majority stake in small uk telecoms company zzoomm to fund investment in new broadband networks in towns across britain.

Zzoomm has built a full-fibre network in henley-on-thames, an affluent oxfordshire town, over the past 18 months and plans to expand to similar locations in the coming years to build a telecoms company focused on market towns that suffer slow internet speeds.

The move is one of oaktrees first direct investments in the telecoms sector. pablo velez, oaktree managing director, said that thefund would bring its operating expertise and experience with growth platforms to builda valuable infrastructure-backed business.

Canadas brookfield asset management, which has invested heavily in assets including telecoms towers, datacentres and smaller operators, took a majority stake in oaktree last year in a deal that created one of the worlds largest alternative asset managers.

Zzoomm was founded by industry veteran matthew hare, who launched rural broadband player gigaclear a decade ago, and this year hired former virgin media and talktalk executive richard sinclair as its chief operating officer.

The company is one of dozens of smaller telecoms players called altnets that are looking to invest in rapidly building full-fibre networks under the noses of established players openreach, which is bts network division, and virgin media.

The influx of capital into the altnet sector has grown rapidly in the past three years as investors have looked to take advantage of britains slow upgrade to full-fibre broadband networks compared with other european markets.

Cityfibre holding was taken private by goldman sachs west street infrastructure fund and antin infrastructure partners in 2017 and has since revealed a plan to build in 100 locations as part of a 4bn investment plan to cover a third of the country.

Kkr acquired urban fibre company hyperoptic in 2019 in a deal that valued the uk company at 500m. in july, warburg pincus and deutsche telekoms investment arm backed a 400m plan to expand london-based telecoms company community fibres footprint to 1m homes and appointed olaf swantee, former head of ee and sunrise, as its chairman.

Until now, zzoomm was one of dozens of tiny players but the oaktree investment will fund a rollout to other towns to achieve the companys ambition to pass 1m homes with freshly laid fibre optic cables within five years.

Small market towns are not easy to upgrade due to their cobbled streets, listed historic buildings and low population density. mr hare said such locations are the type of difficult builds that zzoomm plans to target. it is not like building in milton keynes where everything is new. the buildings are layered on top of each other and the underground (ducts where cables are laid) is a mishmash, he said.

Zzoomm declined to comment on likely future locations as it finalises planning permission.

Openreach has started trials of how best to upgrade small market towns after it completed a fibre build in salisbury. however, mr hare said that with only 4m-5m british homes able to connect to full fibre, there remains a huge gap for smaller telecoms companies to fill. he said zzoomm has identified 240 towns where it could build and if it expands to a third of those it will hit its 1m target.

Zzoomms brand name was coined prior to the spectacular rise in the use of the online video conferencing tool zoom.