Financial groups are supporting niche broadband suppliers to fill the gaps in Britain's regional telecoms network, challenging established providers, such as BT and Virgin Media, to upgrade their services to match the increased demand created by people working from home.

LetterOne is the latest investment group to back such a project. On Wednesday, it announced 1 billion pounds ($1.4 billion) of funding toward the rollout of a fibre network in eastern England by Upp, a new broadband infrastructure entity.

Other investment groups that have reportedly poured billions of pounds into smaller broadband players in the United Kingdom include Oaktree Capital Management, KKR, Warburg Pincus, Macquarie and Goldman Sachs, according to the Financial Times.

The FT said the deals have forced the major providers to respond, with Openreach, BT's network arm, now "accelerating" its upgrade plans, and Virgin Media has said it "wants to bring on board financial partners to expand its high-speed network".

London-based LetterOne is controlled by Russian billionaire Mikhail Fridman, and this is the group's first investment in the British broadband market. It owns other British businesses including health food chain Holland & Barrett.

Upp said in a statement that its plans will "boost the UK's competitive position in the European digital market" and "create more than 600 new jobs in a sustainable way".

The company said it has approval to deploy its own regional fibre "backhaul" networks, and that work is already underway, using existing ducts and poles belonging to BT Openreach, as well as "accessing assets from other infrastructure owners to accelerate deployment". It said its network could eventually be expanded beyond the east of England.

"Upp's management team, which is drawn from leaders across the telecoms and technology industries, aims to level up market towns and coastal areas across Norfolk and Lincolnshire that are currently underserved," it said.

Its multi-gigabit fibre network will use next-generation technology, supported by global suppliers including Nokia, Linksys, Fujikura and Salesforce.com. Supply chain partners have been "carefully selected based on their commitment to social, environmental and sustainability priorities".

Quoted by the FT, Drew Ritchie, Upp's chief executive, said LetterOne had supported the project "with substantial funding that allows us to concentrate on delivering next level broadband to the communities that need it most".

He added: "The world has changed a lot during the past 15 months of the pandemic. People are working from home a lot more, and relying on their digital infrastructure for learning, development, entertainment and connecting with their families."

In comments with the Upp statement, Mervyn Davies, Baron Davies of Abersoch, chairman of LetterOne, said: "Every region of the UK has the potential to create breakthrough innovators, but no region can do this unless it is connected."