Anchor Tenancy Approach to Shared Fibre Infrastructure                             Fibre to the Home Council Europe       ...
CityFibre•   The UK’s leading urban shared fibre    infrastructure provider.•   30,000 km of fibre, 50 UK towns and cities...
Meeting the Needs of all Key Stakeholders    CityFibre’s model brings benefits to all constituents                        ...
Capturing all Layers of Demand in a CityWell Planned City brings new infrastructure opportunity to all                    ...
CityFibre’s Model Attracts Institutional FinanceCreating a platform for large scale infrastructure rollout                ...
Delivering Infrastructure with Attractive YieldsInvestment risk reduction drives to a lower cost of capital       Anchor t...
A Sustainable ApproachLayering of demand and anchoring provide sufficient capexcover to create an attractive business case...
Key Factors for a Successful Model•   Addressing the demand risk for investors     – Layered demand - targeting all sector...
Thank YouJames Thomas                  Feasibility and implicationsjames.thomas@cityfibre.com    of a shared fibre access ...
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James thomas

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FTTH Conference 2013 / Workshop FTTH in UK

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James thomas

  1. 1. Anchor Tenancy Approach to Shared Fibre Infrastructure Fibre to the Home Council Europe Workshop Session 3: Alternative Funding Strategies 19th February 2013
  2. 2. CityFibre• The UK’s leading urban shared fibre infrastructure provider.• 30,000 km of fibre, 50 UK towns and cities.• Largest FTTH network in the UK. Shared Citywide Fibre• Gigler delivering 1.0 Gbps consumer FTTH services. The UK’s Most Powerful Broadband Gigabit FTTH• Supported by the world’s leading investment banks; Macquarie Capital, UBS and Citigroup. D• Rolling out citywide fibre infrastructure for public services, mobile backhaul, businesses and Financial Horsepower: residents. DTo empower the UK society by delivering Engineering Strength:transformational fibre infrastructure that isa foundation of the digital economy D FTTH Council Europe – February 2013 Slide 2
  3. 3. Meeting the Needs of all Key Stakeholders CityFibre’s model brings benefits to all constituents • Alternative superior infrastructure • Reduce dependency on BT Service • Scale solution Providers • Flexible pricing• Supportive investment environment• Attractive to all forms of capital over time • Future proofed infrastructure CityFibre’s Towns & Investors Model Cities • Attract businesses • Employment • Citizen services Policy • Leverage private investment Makers • Minimise public funding • Introduce infrastructure competition FTTH Council Europe – February 2013 Slide 3
  4. 4. Capturing all Layers of Demand in a CityWell Planned City brings new infrastructure opportunity to all Private Sector Distribution Consumers with 100Mbps+ Consumer sector: FTTH Sponsors symmetrical internet access Network SME with Gbps site to site SME sector: FTTP and internet services Private Sector Large enterprise sector: corporate P2P and Large Sponsors resilient ring connectivity Gigabit, low latency fibre for business Core City Metro Network Mobile sector: 3G, LTE, 4G backhaul, data centres Fibre to base stations and small cells Public sector devices: Traffic Control Public Sector CCTV, Sponsors systems, municipal WIFI CCTV, traffic control, municipal WiFi Public sector networks: client, schools, colleges, Core network, Public Sector anchor Council, schools, libraries, healthcare universities, public health FTTH Council Europe – February 2013 Slide 4
  5. 5. CityFibre’s Model Attracts Institutional FinanceCreating a platform for large scale infrastructure rollout • Commitment by investors to Participating Investors fund is supported by anchor Equity, Debt tenancy agreements: ROI, Dividends CityFibre • Anchor tenancy model providesSupports Investment Anchor Tenancy Vehicle Holding Shared Fibre Assets an environment of predictable Wholesale Access cash flows; Access Charges • Predictable cash flows enables financing at a lower cost of Participating Service Providers capital; Retail Services • Lower cost of capital leads to Service Charges attractive wholesale access End Customers charges. FTTH Council Europe – February 2013 Slide 5
  6. 6. Delivering Infrastructure with Attractive YieldsInvestment risk reduction drives to a lower cost of capital Anchor tenant commitment period (5 to 10 years) Deliver in urban areas for optimal ROI Construction continues through yield phase 5 years 10 years 15 years Initial Construction Phase Yield Phase Private Equity Investors Infrastructure Funds Anchor Tenants Mitigate Demand Risks Natural Demand Engineering Partners Mitigate Delivery Risks NextGen Roadshow 17th July 2012 - Slide 6
  7. 7. A Sustainable ApproachLayering of demand and anchoring provide sufficient capexcover to create an attractive business case Anchor tenant Contracted Expected Rationale for expected cash flows to type value / total value/total exceed minimum contracted levels* capex % capex % Public Sector 15% 25% • Additional sites and service extensions into CCTV, municipal Wi-Fi, etc. over time. Mobile Sector 15% 25% • Contracted value only 25% of mobile sites included today; excludes small cells and LTE impact. Residential/SME 50% 80% • Expected penetration of 30% or greater exceeds minimum contracted levels. Low risk for service providers. Total 80% 130% • Payback could be achieved within 7 years at expected values.* Expected minimum contracted levels of 10 years FTTH Council Europe – February 2013 Slide 7
  8. 8. Key Factors for a Successful Model• Addressing the demand risk for investors – Layered demand - targeting all sectors wanting fibre connectivity – Anchor contracts with term and volume commitments• Addressing the build risk for investors – Engineering relationships that ensure delivery at known cost – Cost and network design proven via our FTTH network in Bournemouth• Addressing the demand risk for anchor tenants – City engagement plans like Google Fiber and Reggefiber to drive market awareness and pre-registration – Lower risk for investors delivers efficient pricing for service providers• Establishing a consortium to ensure scalability – Consortium approach of investors, service providers and engineering firms to rollout a large fibre foorprint FTTH Council Europe – February 2013 Slide 8
  9. 9. Thank YouJames Thomas Feasibility and implicationsjames.thomas@cityfibre.com of a shared fibre access model in UK towns and cities Economic review of CityFibre’s model in comparison with a co-investment modelThe report is available at: February 19th 2013www.cityfibre.comwww.oxera.com Oxera i Draft for Comment: Strictly Confidential 9 FTTH Council Europe – February 2013 Slide 9

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