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

50-90%

< 10% 10-50%

> 90%

Europe’s largest and strongest

economy

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

Source: Point-Topic, Akamai, CityFibre

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

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

Source: Reggefiber

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.

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 pre-build

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

21.5

9,755 27.5

1,389

32.8

187

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Einwohner (Mio.) Gemeinden

>50.000

10.000-49.999

0-9.999

German population and communities by community size

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