The UK’s bid to improve its broadband infrastructure has been given a boost as the fibre-optic company Hyperoptic, which is backed by investors including the billionaire financier George Soros, raises £250m to roll out gigabit speed lines to 20 more towns and cities.

Hyperoptic will use the money to start to make its fibre broadband service available in towns and cities including Oxford, Swansea, Middlesbrough and Bournemouth, with the number of homes able to sign up rising from a target of 2m to 5m by 2025.

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Hyperoptic’s expansion to more than 50 cities in total will require an extra 1,500 staff to be hired, more than doubling the size of the business, by the end of next year.

The government has referred to full-fibre networks as the “gold standard” but the UK has been woefully slow in rolling out the next-generation internet infrastructure and is ranked 32nd of 34 OECD countries. Only 4% of homes in the UK have a full-fibre broadband connection, compared with 89% in Portugal and 71% in Spain.

While few consumers and businesses need gigabit speeds – up to 125 megabytes per second – it is likely to become the norm soon. It is 50 times faster than standard UK broadband and three times quicker than the fastest option available from BT.

Fibre networks will be needed to provide the back-end data shifting muscle for the next generation 5G mobile networks and the internet of things – including fully automated homes, driverless cars and “smart” manufacturing.

The UK’s media and telecoms regulator, Ofcom, has said that home broadband data usage has grown at a rate of 36% a year, driven by the boom in streaming and downloading video fuelled by services such as Netflix, Amazon and YouTube.

“Full-fibre broadband starts the wheel turning for so many things that can be built off that infrastructure from autonomous cars, the internet of things, e-health applications and social services at home,” Dana Tobak, the chief executive of Hyperoptic, said. “It is how we can become more sophisticated as a nation.”

The company said the debt-raising, from eight banks including RBS, Barclays and Société Générale, was “heavily oversubscribed” the latest sign of how keen investors are for providers of Britain’s so-called “altnets”, which are building full-fibre networks to rival Openreach or in areas where the BT-owned broadband infrastructure business is yet to upgrade. Hyperoptic was advised by investment bank LionTree.

In April, a Goldman Sachs-backed consortium paid £538m to buy CityFibre, despite the company only having signed up a few tens of thousands of customers to full-fibre broadband. The company has a £500m deal with Vodafone to connect potentially up to 5m homes by 2025.

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In March, Infracapital, part of Prudential, paid £270m for rural player Gigaclear, which has plans to roll out to 3m homes alongside TalkTalk.

In the UK, Openreach has made full-fibre speed broadband available to fewer than 1m homes but has pledged to extend it to 3m by 2020 and 10m by the middle of the next decade.

“We recently announced plans for a nationwide full-fibre broadband network to build a Britain that’s fit for the future,” Margot James, the minister for digital and creative industries, said. “Commercial investment will play a crucial part of this and Hyperoptic’s commitment to deliver gigabit connectivity to more than 50 UK towns and cities shows that they match our ambitions.”