Transcript Slide 1

The role of entrepreneurial
capital in delivering future-proof
broadband
James Enck
Budapest, 04/12/13






Recovering sell-side analyst
Migrated to principal investing at Merrill Lynch
Corporate development consultant to CityFibre (UK)
and BB Glasfaserfonds (DE)
Analyst/advisory roles with OECD, KPN, Wentworth
Capital, Seim & Partner, Diffraction Analysis, and Telco
2.0
Principal recent activities around fiber infrastructure,
towers and datacenters
Produce occasional rants at
eurotelcoblog.blogspot.com
Two notable names are missing – UK and
Germany, each below 1% penetration
Source: IDATE/FTTH Council Europe
Europe’s largest and strongest
economy
< 10%
10-50%
50-90%
> 90%
Consistent innovator in advanced
and precision engineering and
alternative energy technology
Excellent transport infrastructure
Very high levels of internet
adoption
FTTH/B penetration in 2012 0.5%
Huge East/West and urban/rural
divides in availability of >50Mbps
broadband
Source: BBP
Principal global financial and
media center
European hub for international IP
transit and home to major
concentration of data centers
Highest level of economic reliance
upon the internet among the G-20
Very high levels of internet
adoption
FTTH/B penetration in 2012 0.06%
Huge North/South and urban/rural
divides in availability of >24Mbps
broadband
Source: Point-Topic, Akamai, CityFibre
Delivering ubiquitous
FTTH/B in both Germany
and the UK estimated to
cost €80 – 100bn
Current levels of
incumbent investment
don’t come close
Cable networks patchy
and not expanding
footprints
The only answer is from
third party,
entrepreneurial capital
Reggefiber has invested c.€1.5bn over 10 years deploying FTTH networks
in smaller towns and cities in Holland. Network covers >20% of all
households.
Company employs a successful pre-build demand aggregation program,
ensuring penetration is at least 30% at launch. Earlier projects now 50 –
80%.
Has drawn significant investment from the national incumbent and loans
from EIB/Dutch banks.
Source: Reggefiber
Hyperoptic (founded 2011)
Delivers up-to-gigabit services to
large-scale MDUs in major urban
centers
Anchor relationships with
landlords/tenant associations and
demand aggregation
Targets >500,000 households
connected over the next five years
Received £50m investment from
George Soros’ Quantum Strategic
Partners fund.
Gigaclear (founded 2011)
Delivers gigabit services to small
(but highly affluent) villages in
rural England, with poor DSL and
no cable
Replicates best practice in prebuild demand aggregation from
Holland/Nordics
Active in nine communities today,
pipeline of hundreds
Agreement with wholesale
platform to increase service
provider diversity
CityFibre (founded 2011)
Acquired legacy fiber assets in >50
towns and cities
Anchor contracts with systems
integrators serving the public
sector for transformational metro
fiber networks
York network (pictured) now covers
111km and serves 179 endpoints
Similarly-sized network now
contracted in Peterborough
Strong platform for FTTH/B
extension?
BBP a.k.a. BB Glasfaserfonds
(founded 2012)
Strong team of telco/SI/financial
veterans acts as fund manager
1,400 communities (limited cable,
poor DSL) fall into the investment
parameters, deployment hierarchy
driven by ROI
Significant buy-in from incumbent
service providers; ultimate goal is
wholesale migration of existing
DSL/PSTN customers
Significant mitigation of build risk
German population and communities by community size
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
187
1,389
32.8
>50.000
27.5
9,755
10.00049.999
0-9.999
21.5
Einwohner (Mio.)
Gemeinden





Two of Europe’s leading economies lack broadband
infrastructure commensurate with their economic and political
status
There is an investment gap of tens of billions of euro in
delivering ubiquitous fiber access to UK and German citizens
and businesses
Current infrastructure players face cannibalization risk, and
can’t finance a total refresh of their infrastructure, even if they
wanted to do it...
The gap will be plugged by third party, entrepreneurial capital,
targeting specific market niches
Successful models mitigate construction and demand risks by
locking in customer commitment pre-construction, and
delivering a guaranteed minimum utilization level which gives
investors comfort