INCA Event Introduction
A brief survey of fibre finance around the world
8th May 2014
Stefan Stanislawski
2
INCA Transform Digital
Examples of Government financed projects
Australia
• Big bang approach to major
national upgrade
...
3
INCA Transform Digital
Examples involving both public and private (corporate) finance
Sweden
• $4bn “excess”
privatisati...
4
INCA Transform Digital
Examples of entirely privately financed fibre
Verizon FIOS
• 2005-2010 Upgrade of
copper to fibre...
5
INCA Transform Digital
If Government funds underwrite a “bankable” deal over time then
taxpayer funds could be multiplie...
6
INCA Transform Digital
Observations ….
Government driven big
bang projects often
problematic
Kick-starting private
secto...
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Stefan Stanislawski - Ventura - Transform Digital

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Transform Digital Conference 08-05-2014

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Stefan Stanislawski - Ventura - Transform Digital

  1. 1. INCA Event Introduction A brief survey of fibre finance around the world 8th May 2014 Stefan Stanislawski
  2. 2. 2 INCA Transform Digital Examples of Government financed projects Australia • Big bang approach to major national upgrade • Urban fibre • Rural areas various tech • Incumbent compensated by sale of customer base area by area • Scaled to UK Govt equity component =£42bn • High risk big bang project that seems to have gone wrong Qatar • Government building open fibre and also aims to buy already built operator access fibre in due course • Entirely State funded but in unclear policy framework • Complex politics as incumbent also largely State owned and only two operators licensed in this City State Oman • Open fibre built as “free rider” on sewerage system upgrade in capital city by State concession company • Oman Broadband Company (State) being set-up to manage this asset and upgrade towers and fibre across the country • Cautious step-by-step approach to remedy market failure • Financed by long term loans from the State
  3. 3. 3 INCA Transform Digital Examples involving both public and private (corporate) finance Sweden • $4bn “excess” privatisation proceeds kickstarted municipal fibre in 2003 • Scaled to UK =£17.5bn • >100 local networks developed over time and main operator strategies fundamentally changed • Complex market now well established - today ~3% homes fibered each year entirely privately & customer funded New Zealand • Government put $1.5bn up to stimulate private finance of modernisation - 33 local project areas • Scaled to UK =£13bn • 75% to have 100M by 2020. Rural also improved • TCNZ agreed to full structural separation in order to participate unlocking 20% of shareholder value Europe • In France >20 cities and towns have Gigabit fibre networks built via PPP deals • Telecom Italia is in a couple of PPPs and considered hiving off access network into a NetCo • Jersey Telecom is State owned but funded as a business – 100% Gigabit Isle fibre switchover well underway USA • Connect America and other local initiatives gathering pace • USO funds were not being used for copper build so will be targeted at fiberization • Pilots underway – policy should emerge later this year • FCC supported by Commerce Dept, long established rural utilities finance organisation etc
  4. 4. 4 INCA Transform Digital Examples of entirely privately financed fibre Verizon FIOS • 2005-2010 Upgrade of copper to fibre passing 13m homes • Selected areas where CATV was weak and customer density reasonable • Delivering returns largely as anticipated. AT&T copied with u- verse • Some regulatory gains in price regulation in some States UAE • UAE completed the fibre switchover – copper scrapped • Two private but part- State owned operators in friendly rivalry • Business cases driven by lower opex and chance to sell new services • No CATV competition in UAE so longer term also a protective strategy Non-CATV Europe • Fastweb, Italy • RDS, Romania • Operator fibre land grabs in Baltic States, Slovenia, other parts of the Balkans • ~700 Ethernet operators in Poland expected to tap EU funds for ~1000 rural FTTH schemes Other Europe • ~100 small projects in Germany all funded by utilities, small operators etc – no new equity investors • Reggefiber in Netherlands highly unusual in having a billionaire sponsor – now owned by incumbent and boosting ARPUs • Free (Iliad) & France Telecom deployed fibre in selected urban areas
  5. 5. 5 INCA Transform Digital If Government funds underwrite a “bankable” deal over time then taxpayer funds could be multiplied by project finance £1500 / home @50% take rate • 2,500,000 UK rural homes • ~£3.7 bn CAPEX in total • Government has £500m to play with ~10 NetCos • 10-12 NetCos • Spreads execution risk • Allows some piloting and “tail end” community schemes Bankable • If major brands commit … • to pay £13.50 wholesale charge growing 2% pa with inflation • 50% take-up… • USO funds contribute £5 per month ... • Requires £600m Govt support
  6. 6. 6 INCA Transform Digital Observations …. Government driven big bang projects often problematic Kick-starting private sector or PPP finance works Stable and well designed regulatory and policy framework crucial USO funds potentially important and should be steered towards fibre Despite the huge potential of project finance to leverage taxpayer funds we have not seen it happen - yet

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