The FTSE 250 telecoms group said the deal, to conclude in March, will establish a Northern Centre of Excellence to deliver digital infrastructure to the North of England, while the proceeds will be used to strengthen its balance sheet.
The sale is also underpinned by a long-term wholesale agreement for TalkTalk to provide its products in areas where CityFibre builds its internet infrastructure, which the firm says will support customer retention and reduce costs.
Chief executive Tristia Harrison said the sale and wholesale agreement "enables us to continue our strategy to accelerate TalkTalk's fibre growth for our residential and business customers".
In early trading on Tuesday, TalkTalk's shares edged up 0.5% to 115p.
--Adds share price--