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CMS_LawTax_Negative_28-100.ep Digital Infrastructure for our ‘Connected Future’ Global infrastructure report
Portugal Contents Foreword
Digital
Spain
03 Foreword
04 Digital
With digital innovation now firmly at the forefront of our everyday life, interest in the
UK
05 Interview with Jennifer Smith and supporting infrastructure has come sharply into focus. Although we have spent much
Richard Taylor, euNetworks of the recent past seeking ever-increasing capacity from existing infrastructure, it is
06 In the spotlight: countries to watch clear that the latest and most hotly-cited innovations will most likely see us cycle back
UK lags behind in full fibre use: 90%
in Portugal, 71% in Spain, 4% in UK.
to connectivity as the key enabler of infrastructure development.
08 Interview with Ada Cerne,
Edmond de Rothschild Asset There is no debate that fibre reigns supreme when it might lead to the view that a utility-style approach
Management comes to throughput. The team at euNetworks puts this provides an answer. It certainly would help address some
as well as anyone – “fibre is and will remain the only of the shortfalls left from the prevailing, at least in the
10 Investment opportunities in digital scalable economic solution providing the crucial
underlying foundation to an increasingly connected and
UK, competition-based approach to infrastructure
development.
bandwidth hungry world”. This is equally important
12 Interview with Oliver Bradley,
regardless of the platform considered, be it fibre-to-the- Bigger picture, moving from a vertical integration
CityFibre premises (FTTP), 5G or fixed wireless – with each equally structure of the industry to a utility-based and open
reliant on a well-connected and diverse fibre access model would allow regulatory focus to move up
Altnets continue to expand, providing 13 Interview with Sean McLachlan, infrastructure. the ladder and competitive forces to move down,
promising investment opportunities. Aviva Investors facilitating innovation at the retail level. With careful
Re-orientating the approach to infrastructure growth is a planning and forethought, the consistent and long-term
challenge. After years of technologically driven rate of return of the regulated utility style owner /
14 What does the future hold for digital?
incremental expansions of bandwidth, it seems it is operator becomes increasingly attractive to investors,
extremely difficult to secure the focused investment driving investment into the model. Can we otherwise
15 Methodology
needed to scale up connectivity to meet the needs of meet our connectivity aspirations over the next 20 years?
modern digital innovation. A step-change is needed, but
underpinned by an aligned regulatory framework, This report is one of four supplements, expanding on the
strategy and approach. It is far from clear though findings of our 2018 Connected Future report and our
5G set to deliver whether these three foundations are in place. Brief 2017 CMS Infrastructure Index. The 2019 Infrastructure
long-term opportunities. consideration of other infrastructure-intensive markets, Index will be available at the end of 2019.
and the experience of many other European countries,
Chris Watson
Watch Chris Watson give his views on the Partner, Technology & Media
t. +44 20 7367 3701
digital infrastructure market e. chris.watson@cms-cmno.com
CMS_LawTax_Negative_28-100.eps
Cross-industry partnerships set to
dramatically increase: telecommunications,
health, transport and financial services.
Countries to watch Global infrastructure report
Connected Future
Bahrain Italy Romania UK Singapore This report is part of Connected Future.
For more information, please visit
cms.law/connectedfuture
2 | Digital - Infrastructure for our ‘Connected Future’ 3
Digital
Digital
Digital euNetworks
Jennifer Smith,
Chief Financial Officer
The use of digital infrastructure to provide vital connectivity at high speeds for
residents and businesses around the world is nothing new, but its fast-evolving
market landscape promises extensive openings for the infrastructure Richard Taylor,
community over the coming years. While concession-based public-private General Counsel
partnerships (PPPs) rolled out by certain procurement authorities have provided
euNetworks has seen strong growth “We’re upgrading some paths backhaul designs as 5G traffic
a sleek transition to a new asset class, the full potential of the market goes far over recent years. It is a Western and doing route overbuilds as the grows. In addition 5G requires
European bandwidth infrastructure bandwidth demand between some high accuracy - traffic needs to
beyond these projects.
provider, owning and operating ‘hyperscale’ data aggregation sites be highly synchronised at higher
fibre-based networks across the continues to grow. We’re also speed. Fibre technology allows this
region. It owns and operates extending our network, digging accuracy especially in high traffic
14 densely fibred metropolitan new routes to new locations or dense areas, in comparison
We have identified the following future key trends
networks in key cities and also that are near our existing metro with wireless technology.”
within the market: 5G promises to provide continued projects in which
a long haul fibre network that footprints. We’re fortunate to
to deploy capital over the longer term
spans 49 cities in 15 countries. It have a network that enables us The company is also bullish on how
Infrastructure investors finding opportunities in While much of the focus is centred on rolling out fixed
is a company that has expanded to do that and when you own it could withstand any disruption
alternative network providers fibre last mile connections to customers, 5G is poised
its network at pace over the last the duct or sub-duct, you have from newer technology that may
The volume of transactions for broadband deals to move to centre stage over the coming years. The
three years, and by year-end, will more control over the economics emerge over the coming years.
featuring infrastructure investors/players has been next generation of wireless connectivity will necessitate
have lit over 25,000km of fibre of how you shape and develop
growing, particularly in the M&A market. A large significant backing. A fleet of telecoms transmitters will
in the long haul since 2015. This your network,” said Richard Taylor, “Fibre is and will remain the crucial
proportion involve infrastructure funds buying into need to be built to fully densify coverage. This process
investment in the network is driven euNetworks’ general counsel. underlying foundation of the
alternative networks (altnets), both active and passive has already begun, with Wireless Infrastructure Group
by the ever-growing bandwidth internet, catering to an increasingly
networks, that are building up dark and lit fibre (WIG) among the early movers following its GBP 220m
needs of its customers. Stonepeak So what impact will 5G have on connected and bandwidth hungry
coverage to challenge the position of current debt raise in August to finance investment in
Infrastructure Partners acquired a company such as euNetworks? world,” says Smith. “We’re pulling
incumbent groups. 5G-ready infrastructure.
a majority stake in the company Ultimately it’s thought this will new cable through parts of our
in early 2018 and as part of this drive more data, which will be network with greater fibre count
In May this year, Antin and Goldman Sachs-managed Certain markets around the world will offer
transaction funding was secured for transmitted and stored around – so more capacity. Continued
funds bought CityFibre – the largest altnet currently particularly enticing opportunities
increased expansion in these areas. networks. But it also opens up developments in the optronics
operating in the UK – joining Amber, Arcus, Aviva, Internet penetration has progressed in an uneven
more demand for fibre to connect and hardware that sits on top of
DIF, Cube, Infracapital and 3i in investing in the space. fashion globally, with some countries closing in on
“Data centre to data centre traffic up different mobile-related sites. the fibre allows further bandwidth
While these ventures are almost exclusively commercial, comprehensive full-fibre networks while others fall
continues to grow, and given scale. That gives us continued
operating outside concession-based frameworks, long- behind. Those countries which have been slower to
the footprint we own and how “The architecture towards small growth opportunity into the
term partnerships with existing internet service providers adopt new technologies now provide a host of exciting
we develop our networks, it’s an cells – the proliferation of a future with our fibre assets.”
(ISPs) can also provide opportunities for investors. opportunities, particularly those where demand for
opportunity we are well placed to higher number of cells with a
Vodafone and TalkTalk are among the groups who either innovation is high, such as Romania or Italy. Singapore
both serve and benefit from,” says lower radius of coverage – those “So in terms of tech changes, we
partner with altnets or are actively seeking to do so. is at a far higher level of digital development, but its
the group’s CFO Jennifer Smith. will need to be connected to do not see anything competing
progression to the next stage of connectivity opens up
“More than 80% of our revenue a fibre backbone and we see with fibre as the basic building
Scale of capital committed to altnets to grow as vast opportunities too. Its government’s Smart Nation
has connectivity to a data centre that as a potentially promising block of data connectivity. Our
they gain greater market share initiative capitalises on their already advanced internet
at some point in the solution.” area of growth,” says Smith. business is capital intensive and
More investors see altnets as an attractive area services by encouraging projects in the Internet of Things
with various macroeconomic
of investment as they scale up to create more (IoT) and smart mobility fields. Mexico has also recently
Increased activity in this portion “Fibre is the only scalable economic challenges, we could potentially
comprehensive networks, covering larger areas. This will launched a massive nationwide initiative by tendering
of the market has been observed solution to accommodate the face an issue at some point to feed
attract more players into the market, particularly as there out a wholesale mobile network that will provide a 4G
by infrastructure players from multiple requirements for 5G an increase of bandwidth demand.”
is a lot of competition in traditional asset classes, making and 5G-ready service to 92% of Mexicans.
all corners of the industry, from & small cell roll-out,” adds
it harder for investors to deploy capital. While equity has
banks and investors to advisers Taylor. “As fibre is agnostic of
already made moves into the area, debt providers are
and construction groups, so it is technology, operators can easily
now beginning to follow, exemplified by Hyperoptic’s
unsurprising to hear a connectivity and efficiently switch and mix
recent GBP250m debt raised from a syndicate of banks
specialist noting the same. between fronthaul, midhaul, and
including BNP Paribas, ING, RBS, Société Générale and
Barclays. Partnerships with ISPs or signing up large-scale
commercial customers on long-term contracts will also
aid this process.
4 | Digital - Infrastructure for our ‘Connected Future’ 5
Digital
Digital
In the spotlight:
countries to watch
The smartphone and the digital economy have made the internet an essential part Romania
Open Fiber, the first wholesale operator in Italy owned
by Enel and state lender CDP, obtained EUR 3.5bn in
of everyday life, generating a demand for instant, constant and ubiquitous High adoption and demand April 2018 from a consortium of banks for its Fibre to
connectivity. However, more needs to be invested in digital infrastructure to improve Deregulated in 2016 and largely characterised by the home (FTTH) push, making it the largest structured
platform-based competition, Romania’s broadband finance broadband initiative in Europe, Middle East and
broadband access and speed, and many countries are falling behind development market is one of the most promising in the CEE. Despite Africa (EMEA).
goals, with rural areas often experiencing the poorest connectivity levels. it being ranked last for overall performance in the
EC’s 2018 Digital Economy and Society Index, 44% of Open Fiber has also partnered with Cisco Network
Romanian households subscribe to ultrafast broadband Services Orchestrator and a consortium of operators led
according to the survey; outperforming the EU’s by Maticmind, to automate its networks for retail
Global broadband penetration rates have been We have singled out five key jurisdictions that we think average of 15.4%. While its broadband access rate service providers.
identified below: pose the greatest opportunities for investors based marginally lags behind other countries, its high ultrafast
on past deals, local incentives and predicted future adoption rate suggests it is a market that is swiftly TIM (Telecom Italia) has the lion’s share of Italy’s
Regional penetration rate investment activity: developing, promising tangible investment opportunities broadband market, occupying a 45% share.
over the coming years.
33% Asia Pacific
UK Bahrain
31% EU Europe Broadband network owner Electrogroup Infrastructure
6% Latin America & Caribbean A rise in government and private investment has judged now to be the right time to conduct an A nation with a plan
15% Middle East & North Africa The UK has seen significant changes in recent years IPO, with a flotation on the Bucharest Stock Exchange Bahrain has been a leader in the telecommunications
9% Non EU Europe due to the providers in M&A activity. The leading fixed expected before the end of 2018. sector in the Middle East since its market liberalisation
2% North America broadband providers in the UK are BT (36%), Sky (24%), in 2002. Baltelco, Zain Bahrain and Viva Bahrain are the
4% Sub-Saharan Africa
Virgin Media (20%) and Talk Talk (12%). Orange is conducting tests with Samsung and Cisco on market leaders.
high-speed home internet access to improve Romania’s
The UK is also making progress following the launch of fibre-optic networks for 5G expansion. RCS & RDS In June 2018, Viva Bahrain launched its first 5G network
its GBP 400m Digital Infrastructure Investment Fund to (Digi Mobil) has also partnered with Ericsson to launch public showcase, which achieved gigabit speeds of up to
boost full fibre networks across the country, aiming to enhanced broadband services across its network in 1.5 Gbps. This follows its system/network transformation
provide access to 15m premises by 2025. preparation for 5G and IoT developments. contract with Huawei earlier in January to improve IT
Source: FTTH Council EU, 2018 infrastructure and introduce wireless radio technologies
With fibre infrastructure still significantly lacking, there Italy as part of its 5G readiness strategy.
is a demand for improved services. Only around 4%
of homes and businesses in the UK have a full fibre A favourable regulatory regime to encourage Singapore
The EU has set an objective to achieve offering, compared to much higher rates in other EU investment
broadband speeds of 30 Mbps for all countries where full fibre is enjoyed by 90% of homes Although showing a low penetration of digital, the Delivering the smart nation
European households and ultrafast speeds and businesses in Portugal and 71% in Spain. potential of the Italian market is significant. In 2015 Italy High wired and wireless broadband penetration rates are
launched its strategy for high-speed broadband which driven by the city’s ‘smart nation’ ambitions to integrate
of 100Mbps for 50% of households by Within this market, CityFibre, Hyperoptic, Gigaclear and has simplified its regulatory framework and incorporates digital technology across households, businesses and
2020. However, many EU member states others have emerged strongly onto the scene. It is here investments into future-proof infrastructure. public services, making the country a global broadband
are not on track to meet this goal, that infrastructure investors have found opportunity in pioneer. Singtel, Starhub, M1 and TPG Telecom are
the UK, highlighted by the takeover of CityFibre by Antin This summer the Italian government sought to create market leaders.
although others such as Portugal and Infrastructure and West Street Infrastructure Partners in a single company for the roll out of fibre. This solution
Spain have made huge progress. June 2018. The wider altnet market is currently largely aims to avoid costly overbuild of infrastructure as rival In 2017, Singtel entered a 5G Centre of Excellence
an equity market characterised by small, high-risk networks are built out by Italy’s incumbent phone partnership with Ericsson to develop a 5G pilot network
entrepreneurs. operator Telecom Italia and the competing broadband in Singapore’s science, business and IT hub. The pilot
operator Open Fiber, in both of which the government network, launching in Q4 2018, aims to deliver 5G
Homes and businesses with a full fibre offering holds stakes. coverage with enhanced mobile broadband speed. M1
similarly announced a partnership with Huawei in June
90% 71% 4% 2018 to embark on 5G trials.
Portugal Spain UK
6 | Digital - Infrastructure for our ‘Connected Future’ 7
Digital
Digital
Edmond de Rothschild Asset Management
Ada Cerne,
Senior Investment Director
In its position as a specialised debt But private broadband transactions Another way to safeguard an outlay
fund for infrastructure projects across pose issues that might not be found on a transaction is to choose wisely
Europe, Edmond de Rothschild in more traditional infrastructure exactly which projects to get involved
Asset Management has placed a deals where there often are long-term in, with rural areas likely to be later
keen eye on opportunities arising concession periods, offtakers, and targets for disruptive technologies
in the fibre broadband sector. stable cash flows sometimes even due to their smaller and less dense
Currently fundraising for the fourth made through availability payments. consumer markets, according to
edition of its BRIDGE infrastructure Cerne, whilst at the same time
debt platform, the fund manager She says, “That is not the case with being the areas in which most
eyes deals across transport, energy fibre optics where you are relying investment is currently needed.
(including renewables), utilities on consumer demand to generate
and social infrastructure, as well as the project’s revenue. So that is While opportunities in other areas
telecoms where it has concluded two the main risk that we face and – such as 5G and smart cities – are
investments in the broadband sector. we need to structure our facilities not imminent, investments especially
to be comfortable with that.” in smart cities represent a very
The group is continuing to pay attractive asset for BRIDGE given
close attention to opening up new One remedy is to stipulate that their crucial role in supporting an
avenues for its business within the senior debt is not able to be interconnected economy and society.
wider digital infrastructure space. drawn until a specified percentage
of a local catchment area has Cerne says, “I know there are
“In my mind I split the fibre committed to using the services several cities that are working
optics developments between offered by a new fibre network. towards providing this kind of
the government framework interconnectivity and we would love
ones and the private initiatives, “This is nothing new but it to be involved in the financing of
and I see opportunities in both gives lenders the comfort that such projects. In this respect more
areas,” says Ada Cerne, Senior a set percentage of consumers co-ordination between all the agents
Investment Director at Edmond have expressed an interest or and players involved is required for
de Rothschild Asset Management. are legally bound to take up what is certainly the next stage in
“For the government projects, a contract,” says Cerne. terms of telecom transactions focus
France has been very active in for infrastructure funds like BRIDGE.”
holding regional tenders but this is When it comes to technology risk,
probably now coming to an end." this is something that infrastructure
lenders are also naturally keen to
“Having said that, because of the manage, with the pace of change
number of franchises that have in the sector potentially leading to
been awarded, I think there are redundancy of an existing technology
opportunities to bring those together in a relatively short space of time,
to do portfolio refinancings so that is even for government-backed PPPs.
where France could be interesting.”
“Although some of the concessions
Cerne also namechecks Ireland, can be up to 30 years, usually the
Scotland and Germany as markets debt facilities for private initiatives
where similar, mainly rural, schemes are effectively much shorter at
could prove fruitful over the next below 10 years. Even the facilities
year or so, whilst privately-initiated within concessions have incentives
fibre developments will be much for the borrower to refinance after
more scattered across the continent. 10-12 years, so it’s quite rare we
have a real 30 year technology
risk in terms of the debt that is
issued today,” says Cerne.
8 | Digital - Infrastructure for our ‘Connected Future’ 9
Digital
Digital
Investment opportunities
in digital
Neutral host infrastructure could
unlock investment
The utility-like model of neutral host infrastructure will Technology risk is something that
do away with the vertically integrated model used by infrastructure lenders are keen to manage,
the UK’s larger fixed and mobile broadband providers
with the pace of change in the sector
and introduce shared infrastructure which retailers
would have equal access to. The UK government’s potentially leading to redundancy of
recent telecoms review concluded that neutral host existing technology in a relatively short
infrastructure could unlock investment, address 5G
space of time.
deployment challenges, improve rural connectivity and
Ada Cerne
reduce barriers to entry for retail service providers.
Senior Investment Director,
Edmond de Rothschild Asset Management
Edmond de Rothschild Asset Management’s Ada 5G and small cell densification To facilitate further development, government will
Cerne highlights that technology risk is something UK authorities aspire to put the nation at the front need to cut red tape and mediate relationships and
that infrastructure lenders are keen to manage, with of the pack when it comes to 5G. Outdoor small cell collaborations with utilities and landowners using
the pace of change in the sector potentially leading networks will form a crucial backbone for this offering. property and existing infrastructure to build networks.
Rural community involvement
to redundancy of existing technology in a relatively
Widespread internet access has tremendous benefits
short space of time. She states: “Although some of With more communication towers and small cell In September 2018, SSE’s telecoms division signed an
for rural areas. However, due to low population density
the concessions can be up to 30 years, usually the base stations required to support 5G, there are many agreement with the UK mobile networks Three and O2
and a smaller customer user base, rural areas are less
debt facilities for private initiatives are effectively opportunities for both construction and asset operation. to accelerate fibre connectivity using space in Thames
commercially attractive, often requiring some sort of
much shorter at below 10 years. Even the facilities With 5G expected to operate at higher frequencies Water’s sewer network to pave the way for future
government subsidy for infrastructure.
within concessions have incentives for the borrower to of between 28Ghz and 39GHz, small cells will allow deployment of cell sites and masts for both 4G and 5G.
refinance after 10-12 years, so it’s quite rare we have a greater coverage at this level due to the resulting weak
The UK government estimates around GBP 3-5bn of
real 30 year technology risk in terms of the debt that is signals being unable to sufficiently penetrate obstacles. Cross-industry partnerships will emerge predominantly
funding is needed to bring full fibre to these areas. In its
issued today.” in telecommunications, health, transport and financial
2018 Autumn Budget, the UK government pledged GBP
Ofcom recently auctioned off the 3.4GHz band services. The healthcare sector is already exploring the
200m would be invested to fund the installation of full-
Another way to safeguard an outlay on a transaction is to telecoms companies for 5G use and various potential of 5G advancements with remote, robotic
fibre broadband in rural areas, starting with replacing
to choose wisely exactly which projects to get involved government-backed research initiatives are underway surgery exploiting the step-change in the speed of
aging copper lines in primary schools. This budget
in. Rural areas are likely to be later targets for disruptive to encourage investment, develop technology and data transfer.
has been allocated from the National Productivity
technologies due to their smaller and less dense prepare a regulatory framework. The GBP 1bn National
Infrastructure Fund.
consumer markets, according to Cerne, whilst at the Productivity Infrastructure Fund has provided a GBP
same time being the areas in which most investment is 700m pool of funding split between local full fibre and Cross-industry partnerships will emerge
Some countries rely on competitive bidding processes.
currently needed. 5G programmes. The government is also in the process predominantly in telecommunications,
France has the most established broadband PPP
of developing a pilot 5G city as part of the 5G Urban
Transport for London is currently running a tender
programme, largely focused on rural developments.
Connected Communities project. health, transport and financial services.
The Grand Est project of 2017 with a capex of
process to find a neutral host operator to provide a 4G
USD 1.3bn, involved the procurement of a FTTH network The healthcare sector is already exploring
network to the London Underground. WIG is among the early movers in this area following its
via a publicly owned fibre broadband network. The the potential of 5G advancements
GBP 220m debt raise in August to finance investments
scheme drew wide interest from both equity and debt,
Wireless Infrastructure Group (WIG) has participated in
with a selection of banks, financial institutions, telecoms
in 5G-ready infrastructure. WIG sealed loans from with remote, robotic surgery exploiting
the development of neutral host distributed antenna Barclays, Barings, Lloyds, MetLife, RBS and Vantage
groups and infrastructure funds all contributing to the the step-change in the speed of
systems in the UK, Spain and Portugal. Infrastructure in a demonstration of the willingness of
financing package. France has continued to roll out data transfer.
lenders to back projects in this area.
further projects under its PPP programme since.
Airspan Networks, a small cell equipment supplier, has
created the wholesale network carrier Dense Air to Inter-industry and cross-industry partnerships
“Fibre broadband infrastructure is a real economic driver
provide much the same service in European markets, Communication infrastructure development
from a country perspective and rural communities are
including Ireland and Belgium. necessitates various inter-industry partnerships and
an important part of this,” says Aviva Investor’s Sean
cross-industry partnerships. System developers and
McLachlan. “Many people are increasingly looking to
mobile operators will collaborate to lead joint builds,
work more at or closer to home, but for many living in
and anchor tenants will be needed to provide long-term
rural areas that’s almost an impossibility.”
committed revenue streams.
10 | Digital - Infrastructure for our ‘Connected Future’ 11
Digital
Digital
CityFibre Aviva Investors
Oliver Bradley, Sean McLachlan,
Corporate Finance Director Senior Director
In just a few short years since its “That guarantees a yield on a Bradley also states that there When asked about the challenge “Many people are increasingly looking “People talk about future-proofing
foundation in 2011, CityFibre has capex that we’re building, that will likely be an opportunity altnets face in the UK’s monopolistic to work more at or closer to home and nothing is completely future-
grown to lead the pack of altnets gives you a worst-case scenario for for bank debt as part of the market Sean McLachlan, Senior but for many living in rural areas proof of course, but in terms
in the UK bidding to challenge the your sensitivities and modelling. overall funding mix, opening Director at Aviva Investors, says that’s almost an impossibility,” says of speed, fibre operates at the
incumbent operators in the fibre But, more importantly than that up a new corner of the “I think in the UK, just by the Aviva Investor’s Sean McLachlan. speed of light with excellent
broadband sector. That growth in my mind, is the behaviour it market to this type of capital. nature of how altnets have come reliability and can be highly cost-
and a tie-up with Vodafone incentivises, because what it means Leveraging the equity within to be, you’re looking at a different “So, if you’re working in London effective”, says McLachlan.
ultimately drew the interest of is that Vodafone has a powerful the business could very well business model than most of and living somewhere in say West
infrastructure investors, with funds financial incentive to really market help the network expand the other European countries. Sussex, you may have to come “Fibre is a great technology for
managed by Goldman Sachs and sell those connections.” over the next few years. into London because you can’t do providing a pretty long-term
and Antin swooping to acquire “For example, the procurement of your work at home. Then there’s a solution to connectivity. It’s also
the company in April 2018. That last point will serve to ensure “The key for us to really increase fibre infrastructure is being done number of clear economic benefits very complementary to some of
an alignment between both our throughput is to be building with very different models such when you look at connecting up the other technologies that you
In CityFibre the pair of new Vodafone and CityFibre’s goals and multiple towns at a time. Once as the 4th utility approach, very smaller villages and rural areas see out there such as 5G.”
owners identified a company that with the former being a relatively we’ve got going in the twelve similar to regulated gas, water and and so the demand case is very
would provide a large enough small player in the ISP market it will towns and cities that make up our electricity or PPP structures bringing compelling, from our perspective.”
opportunity to deploy capital, look to take an important chunk of first million, we’ll then be able to private and public sectors together.”
strong potential for growth and market share from other groups, move to 12 more towns and cities With this in mind, investors
potential for good returns. such as BT, Sky, TalkTalk and Virgin. to make up the next million and so “Fibre broadband infrastructure is a need to get comfortable with
on. We would hope to be in five real economic driver from a country long-term risks, especially when
Oliver Bradley, Corporate Finance Vodafone will at first have million premises by the mid-2020s.” perspective and rural communities putting fibre into premises.
Director at the company says, “I exclusivity to offer its services are an important part of this.
think what attracted them to us over the networks CityFibre builds The altnets that have emerged in
is we are a platform on a journey out. After a set period other the UK over the past few years have
to becoming a fairly substantial ISPs will then be able to use the not only brought more competition
utility. To build a network to five lines laid down by CityFibre. into infrastructure provision, as
Chris Watson reflects on the rise of altnets
million homes requires around well as more choice for consumers,
£2.5bn of capex and that’s a good “So the proposition to the other but have also sped up the
amount of money to spend.” ISPs then becomes, why wouldn’t development of fibre broadband
you come onto our network all across the country. This is a key
The target for 5 million homes because it is a much better network argument for the existence of the
cited by Bradley is contained in the than Openreach’s.” says Bradley. altnets, according to Bradley.
agreement with Vodafone in which
the mobile phone group will make “It’s cheaper than what you’ll “If you didn’t have companies like
a volume-based commitment to be paying for a far inferior us, even in relatively small parts of
20% of the home and business product, as we price competitively the country, showing what could
connections due to be financed, with the through the cabinet be done, I think from a consumer
constructed and operated by products that are available perspective, a government
CityFibre. This is a key component to them on Openreach.” perspective and from an industry
to mobilising capital for the perspective, you’d be left at the
group, according to Bradley. It is this competitive pricing that mercy of what Openreach want
Bradley hopes will entice even to do, and for Openreach’s own
He says, “You can take it to banks more retail business towards rational reasons that probably
and say, ‘here is a minimum CityFibre’s networks, as any ISP means a slower path.”
revenue Vodafone, one of the that takes advantage will accrue
largest telecommunications higher profit margins compared
companies in the world, has to similarly priced products hosted
given us an ironclad guarantee on the incumbent’s hardware.
that if we pass the homes, they
will take 20% of them.’”
12 | Digital - Infrastructure for our ‘Connected Future’ 13
Digital
What does the future Methodology
hold for digital?
Our research aims to identify the most promising markets and jurisdictions for investment for broadband,
electric vehicles, energy storage and smart mobility. Since the four sectors analysed are markedly different
in terms of their maturity, research methods have been tailored accordingly. The analysis of more mature
Given the current and predicted growth in data traffic, the rapid expansion of IoT sectors, for example, digital has been more quantitative, other sectors (i.e. smart mobility) required a more
qualitative approach.
devices, and the emergence of new technologies, such as machine learning and AVs,
the rapid evolution of broadband networks is inevitable. The anticipated capabilities The quantitative data collated has been categorised according to sector, country, financing model,
transaction stage, transaction value, participant role and status, with the goal of developing advanced
of 5G will allow new technologies to break through and become mainstream. 5G data-driven analytics and insights. Our main source was dataLive, inspiratia’s proprietary project database
networks are expected to bring improvements to the wireless space: lower costs of that monitors global project-financed social infrastructure, transport and renewables deals. Other sources
include governments, international organisations, rating agencies, consulting firms, academic literature,
transmitting data, substantially higher data speeds and low latency. newspapers, specialist press, press releases and in-depth interviews with market participants.
Our qualitative analysis was based on in-depth interviews with leading market practitioners to assess
the interest of potential investors. This analysis provided insights on potential revenue streams, risks and
Data centres tolling data, traffic management and potentially making
inhibitors to successful investment, deeper understanding of the successful case studies, political support,
Data centres will become even more important as it ready for connected and autonomous vehicles.
regulatory framework, investment climate, technology maturity and gain an understanding of any other
much of the data created and distributed across
issues potentially affecting the investment landscape.
connected devices will be stored in the cloud. Significant Smart nations
updates may be needed to match the capabilities of It is naturally more difficult to implement ‘smart nation’
About CMS
fast networks. According to Next Generation Mobile strategies across countries with greater landmass
Ranked as the world’s sixth largest law firm by lawyer headcount and the sixth largest in the UK by revenue,
Networks, 5G is predicted, compared with 4G, to reduce due to the increased capital requirements of more
CMS can work for you in over 40 countries worldwide. Globally 4,500 lawyers offer business-focused advice
latency by 80% and improve reliability to near 100%, infrastructure required per capita. Smart nations give
tailored to our clients’ needs, whether in local markets or across multiple jurisdictions.
eliminating downtime. greater advantages to modern ‘city states’ which, along
with having fewer administrative layers to align before
Across our eight core sectors – Consumer Products, Energy, Financial Institutions, Hotels & Leisure,
Internet of Things (IoT) a project can begin, have the advantage of a lower
Infrastructure & Project Finance, Life Sciences & Healthcare, Real Estate, and Technology, Media &
As roll out and usage of IoT devices including wearables, population than an average country, so requiring less
Telecommunications – we have some of the brightest and most creative legal minds ready to advise you.
smart homes and vehicles are growing, new 5G connecting infrastructure such as transmission cables
networks will become crucial to enable technology- and radio towers.
In addition to this report, we have a broad range of thought leadership papers covering major sector issues.
driven infrastructure updates, given that they are
capable of handling up to 100 times more connections Singapore leads the field, but it seems unlikely to remain
per radio base station than 4G. This will support wider unchallenged as Hong Kong and Dubai look to make
adoption of smart homes, smart cities and AV across advances in smart mobility, healthcare, planning and CMS_LawTax_Negative_28-100.eps CMS_LawTax_Negative_28-100.eps CMS_LawTax_Negative_28-100.eps CMS_LawTax_Negative_28-100.eps
the globe. finance.
Autonomous vehicles As the cost of manufacturing the related infrastructure
As cars capable of connecting to the internet for comes down, the implementation of these strategies
navigation and entertainment purposes become more across greater areas will be more realistic. Countries such Finding the balance:
human touch versus high tech
widespread, the demand on mobile networks and as Estonia and South Korea are leading the way in this
Infrastructure Index UK Real Estate Report – Warehouses Unpacked
A new direction Box Clever Millennials and the future of the hotel and restaurant sector
satellites will increase. Data consumption by vehicles is area, following the digitalisation of government services Smart. Healthy. Agile. 1
likely to rise further, and new generation networks will in Estonia and effective promotion of smart cities in Infrastructure Index: UK Real Estate Report: Finding the balance: UK Real Estate Report:
have to satisfy that demand. As AVs and 5G networks South Korea. A new direction Box Clever human touch versus Smart. Healthy. Agile.
are both in the early phases of development it is difficult high tech
to predict how these technologies will interact. However,
cms.law
it is safe to say that reliability and ultralow latency
features of 5G could prove to be useful for
Singapore leads the field, but it seems
About Inspiratia
vehicle-to-vehicle (V2V) and vehicle to infrastructure unlikely to remain unchallenged as Hong
inspiratia pushes the boundaries of analytics in the global infrastructure and
(V2I) communication technologies helping AVs navigate Kong and Dubai look to make advances renewables sectors, producing the most accurate and insightful analysis, uncovering
in traffic.
in smart mobility, healthcare, planning new financial information and making robust sector predictions.
The Pennsylvania Broadband Initiative seeks to equip the and finance.
inspiratia provides clients with the tools to anticipate and analyse market trends in a way that helps grow
Pennsylvania Turnpike toll road that runs across the state
their pipeline of deals and assists with business development. Based in London and Washington DC,
with fibre-optic connectivity to assist in transmitting
inspiratia has an international team of industry experts and analysts all with in-depth sector expertise and
extensive professional networks. www.inspiratia.com
14 | Digital - Infrastructure for our ‘Connected Future’ 15
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