Andy Burnham’s former mayoral office backed CityFibre’s bid for a broadband business, prompting questions about his involvement because the bidder is part-owned by an Emirati wealth fund headed by Manchester City’s chairman.

The Greater Manchester Combined Authority (GMCA) says its position reflects competition and consumer interests. The Competition and Markets Authority (CMA) has separately expressed a preference for CityFibre, although rival bidder Nexfibre disputes its financial assessment.

According to sources familiar with a March meeting, GMCA officials told executives at Substantial, the business-to-business broadband provider being sought, that they would recommend CityFibre to preserve competition in Manchester. Substantial and Virgin Media O2 both have networks there.

In an interim report published on 2 October, the CMA preferred CityFibre because it considered a Nexfibre takeover would reduce competition. It said almost all the correspondence it received raised concerns about Nexfibre acquiring Substantial.

Nexfibre, jointly owned by Liberty Global and Telefónica, which also own Virgin Media O2, has tabled a £2bn bid. It calls the CMA’s report “fundamentally flawed”, arguing that assumptions about CityFibre’s future finances are uncertain while its own offer is fully funded.

CityFibre has debts approaching £4bn and reported a £545m pre-tax loss in its latest accounts. It made 120 redundancies last year, amid higher borrowing costs and slower-than-expected household take-up. A report earlier this month said it was asking banks to accept losses of up to £2bn on loans.

Buying Substantial would increase revenue but require billions more from investors. CityFibre, which aims to challenge BT’s Openreach, has reached more than 4.5 million homes and businesses and targets eight million.

Mubadala, led by Manchester City chairman Khaldoon Al Mubarak, is among CityFibre’s three largest shareholders. Its percentage holding is undisclosed. It invested £800m in 2021–22 and, with other shareholders, has committed another £900m. The Treasury’s National Wealth Fund has invested about £300m.

CityFibre says customer numbers are growing, substantial funding is available and recapitalisation is under way. Its shareholders reaffirmed their commitment.

Conservative shadow sports minister Louie French demanded an explanation of the lobbying and transparency over Burnham’s role. Two hospitality dinners with Al Mubarak were omitted from an initial GMCA statement about Burnham’s club meetings. Burnham, now Prime Minister, has praised the owners’ contribution to Manchester; Downing Street said the club was “not above the rules”.

The GMCA says at least three residential broadband infrastructure providers would protect choice, resilience and low prices. That is its stated justification; whether Burnham personally participated in the lobbying remains unanswered.