17 september 2010Financing FttH Networks in     the Netherlands    Pre Conference Workshop      8 February 2011, Milan    ...
History                                                 2 | 19          ‘Regge’ river + Fiber = “Reggefiber”
Vision  FttH is like real estate             FttH is future proof (end infrastructure)                             Network...
Why glass fibre ?  Fiber to the Home is the only broadband infrastructure that can comply with  the exponentially growing ...
About Reggefiber  Founded in 2005 by Reggeborgh  Builds, owns, rents and operates passive (dark fiber) networks (FttH) in ...
Key figures30 locations   55 locations                              6 | 19
Key figures              7 | 19
Business model – Parties involved & Value chain                                                                           ...
Business model – Revenues  PenetrationRevenues   Monthly rentals paid by Active Operators to Reggefiber:     Fixed tariffs...
Business model - Capex, OpexCapital expenditure  CAPEX per Home Connected typically around €1,000,  consisting of labor (c...
Typical cash flow profile of a FttH projectAn example, how would you raise debt funding for such a project?               ...
Key issues Debt fundingIssue                                      AnswerTrack record                               Many pr...
Secured credit facilities (€285m) from EIB and commercial banks for33 local Network Companies (NEM) in ‘ring fence’       ...
FinancingKey characteristics    Maturity c. 10 years    €285mn 50/50: EIB and commercial banks    Drawings and repayments ...
Questions?             15 | 19
Regional marketing is Key to create a local hype            Information session                                           ...
Construction               17 | 19
No digging in the gardens! A garden rocket                                             18 | 19
Thank you for your attention!                                19 | 19
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FTTH Conference 2011 Workshop Financing FTTH Networks in Netherlands Mark Meijer REGGEFIBER

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FTTH Conference 2011 Workshop Financing FTTH Networks in Netherlands Mark Meijer REGGEFIBER

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FTTH Conference 2011 Workshop Financing FTTH Networks in Netherlands Mark Meijer REGGEFIBER

  1. 1. 17 september 2010Financing FttH Networks in the Netherlands Pre Conference Workshop 8 February 2011, Milan Mark Meijer Jan Davids Manager Corporate Finance Reggefiber Directeur Corporate en Business Development 1 | 19
  2. 2. History 2 | 19 ‘Regge’ river + Fiber = “Reggefiber”
  3. 3. Vision FttH is like real estate FttH is future proof (end infrastructure) Network has to be open 3 | 19
  4. 4. Why glass fibre ? Fiber to the Home is the only broadband infrastructure that can comply with the exponentially growing broadband demands of the consumer and service providers CAPACITY SPEED SYMMETRICAL UNINIQUE FIBER PAIR …… …… …… …… 4 | 19
  5. 5. About Reggefiber Founded in 2005 by Reggeborgh Builds, owns, rents and operates passive (dark fiber) networks (FttH) in the Netherlands Since 19 December 2008 a joint venture of Reggeborgh – KPN approved by NMa and OPTA and regulated OPTA Combination of KPN’s installed base of consumer clients with Reggefiber’s experience in building and operating FttH networks Current shareholding: KPN 41% - Reggeborgh 59% Under certain conditions KPN could acquire the majority of the shares Rental income has been regulated by OPTA to capped fees Balance Sheet total c. €900mn; strongly growing 5 | 19
  6. 6. Key figures30 locations 55 locations 6 | 19
  7. 7. Key figures 7 | 19
  8. 8. Business model – Parties involved & Value chain Consumer broadband KE^hDZ^ subscription packages EUR 55– 110 (triple play) W ^W ^W WE ^W ^W ^W ^ Wholesale● Deliver services to consumers agreements● Communicate to consumers Wholesale broadband access EUR 35 – 42 (triple play) K Z WE t K t s K● Buy in capacity on Reggefiber’s passive fiber network ODF Agreement● Deliver wholesale fiber services ODF Access to service providers EUR 12 – 17.50 [*] W K Z K s● Builds, owns and operates the passive fiber network● Delivers open access to active Management Agreement Indicative monthly price operators ranges per active ED connection 8 | 19 [*] excludes one-off fees, line rentals etc.
  9. 9. Business model – Revenues PenetrationRevenues Monthly rentals paid by Active Operators to Reggefiber: Fixed tariffs per Home Activated (fiber pair rental) dependent on capex : €12.00 – 17.50 Fixed tariffs for Area PoP rental (€500) and City Pop rental (€600) One-off fees: Area PoP connection: €3,000 fiber pair connection: €100 A discount applies depending on the total number of Homes Activated / customers served in a certain area Rentals indexed anually with CPI (*) one Area PoP can serve maximum 2,500 Homes Passed 9 | 19
  10. 10. Business model - Capex, OpexCapital expenditure CAPEX per Home Connected typically around €1,000, consisting of labor (civil works, engineering: 80%) and materials: 20% Capex reduces 10% every year CAPEX levels vary depending on local circumstances (in particular urban density, rivers, canals, railroads)Operational expenses Main items and model assumptions: General costs: 3% of gross rental revenues Activation costs: €20,- one-off for activating one fiber pair Management fee: €12,- per year per Home Passed (payable by NEM subsidiaries to Reggefiber Operator B.V. pursuant to Management Agreement) 10 | 19
  11. 11. Typical cash flow profile of a FttH projectAn example, how would you raise debt funding for such a project? 11 | 19
  12. 12. Key issues Debt fundingIssue AnswerTrack record Many projects were evidencing already mature cashflows that could be ringfenced as a portfolio in a seperate vehicle: RingfenceHow to “secure” penetration Demand-based-role-out ensuring upfront c. 30-40% start penetrationRegulated Billing entity “RFO” could not Direct Agreement between RFO and thebeb a guarantor/borrower t /b Ringfence Ri fNon-recourse Significant contribution of the sponsors: c. 65% of the BS total at financial close and 45% at the end of the construction FttH is very strategic to KPNHybrid debt structure. Various bankers Learning by doing ☺from different backgrounds/desks:Project Finance/TMT/General CorporateLending 12 | 19
  13. 13. Secured credit facilities (€285m) from EIB and commercial banks for33 local Network Companies (NEM) in ‘ring fence’ Reggefiber Reggeborgh KPN B.V. KPN B.V. Reggefiber Reggefiber GroupB.V. Group B.V. Reggefiber Reggefiber Reggefiber Reggefiber ttH B.V. ttH B.V. Operator B.V. Reggefiber Wholesale B.V. Wholesale B.V. Ring fence KPN B.V. (G)NEM NEM NEM subsidiaries 33 FttH projects other FttH projects KPN B.V. 13 | 19
  14. 14. FinancingKey characteristics Maturity c. 10 years €285mn 50/50: EIB and commercial banks Drawings and repayments show a roller coaster shape Draw test: Total debt / Homes Activated “fixed amount” Net Debt/EBITDA N D b /EBITDA covenant After construction; DSCR-covenant and cash sweep Security on network, receivables, bankaccounts, shares, etc Minimum interest hedging requirement Significant information requirements 14 | 19
  15. 15. Questions? 15 | 19
  16. 16. Regional marketing is Key to create a local hype Information session 16 | 19
  17. 17. Construction 17 | 19
  18. 18. No digging in the gardens! A garden rocket 18 | 19
  19. 19. Thank you for your attention! 19 | 19
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