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Plenary session financing ftth networks day 1 joost goderie
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Plenary session financing ftth networks day 1 joost goderie


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Plenary session financing ftth networks day 1 joost goderie CIF Netherlands

Plenary session financing ftth networks day 1 joost goderie CIF Netherlands

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  • 1. Fiber to the Home networks,de-risking infrastructure assets forgrowthFttH Council Europe9 February 2011Communication Infrastructure FundJoost Goderie – Fund Managing Director Brengt de wereld bij u thuis.
  • 2. Introduction Fund Management Equity Investors
  • 3. CIF focuses on infrastructureThree layer model
  • 4. Dutch market characteristics Fixed broadband bandwidth penetration = 90 % Multiple fixed and wireless infrastructures, hosting a wide range of diversified operators Strong competition on services and price Crowded market does not justify new infra investments
  • 5. Why invest in infrastructure when? ‘New’ services do not increase ARPU Prisoners dilemma drives behavior in competitive environment Refurbishment of network that concentrates on technology is cheaper on the short run Consolidation is needed at the infrastructure level, as no service requires dedicated pipe Who takes the lead ultimately?
  • 6. Fresh look, paradigm shiftCIF concentrates on existing demand for, as well asconsolidation of infrastructure, where:  Cable is the superior infrastructure in foreseeable future  Drive for open infrastructure is key for deploying FttH next to cable on short term  Result is long term de-risking of the cable-FttH asset, thus lowering the R.o.I. requirements of combined infrastructure
  • 7. Equity financing pre-requisites1. Neutral, open access infrastructure model2. Long term lease agreement in place3. Consolidation of existing infrastructures and smooth transition of customers (brown field approach)
  • 8. Trend is our friendCIF vision for 2020 Telcos/cable companies are connectivity companies using different infrastructures providing full OTT services. Basic infrastructure consists of fiber network, coupled to seamless mobile infrastructure. Structural separation of infrastructure and services commonly implemented. Institutional investors provide ‘patient capital’ for infrastructure.
  • 9. Example: FttH next to Coax 2010-2013 HFC Infrastructure Fiber Area Amplifier PoP City COAX < 300m PoP Fiber Infrastructure Area PoP FiberLegenda Total # homes 153.000 Fiber A Fiber B FttH coverage 65% COAX FttH infra capex €100 mln Total infra investment €300 mln
  • 10. How open?CIF advocate of open access model, whilst managingpredatory pricing by:1. Two lessees on FttH physical network2. Multiple lessees at wholesale level3. Guarantee full open IP
  • 11. Two approaches Greenfield BrownfieldInfrastructure multiplication Infrastructure consolidationCustomer Aggregation Existing lessee – volumeFast commercial migration Timely commercial migrationHigh risk debt-equity financing Low risk- equity financing
  • 12. Conclusions Consolidation of infrastructures is key focus. FttH satisfies primarily existing, not future demand Always de-risk assets and stabilize cash flow, not visa versa Convincing existing owners is though, but do-able CIF: open for business