This report is produced by FTTH Council MENA within the series of research papers conducted by the Regulatory and Policy committee to strengthen its cooperation with policy makers, governments and regulators in the region.
To positively influence the relevant policy and decision makers the R&P committee prepared this paper to highlight the potential for infrastructure finance to fund investment in Fibre of the Home which includes an assessment of a different approach to funding fibre FTTH deployments including NBNs.
This report includes information, updates and generic recommendations that reflect the views and experience of the expert consultants:
Assessing the Potential of the Infrastructure Finance Technique
There is now growing interest in investing in fibre from a different type of fund – infrastructure funds. Such investors invest in a project rather than a company and seek long-term positions (20-30 years) in infrastructures that are inherently inflation proof.
Infrastructure investors have trillions of dollars invested in airports, roads and, of course, there is a whole sector specialised in real estate. Packaging FTTH projects as infrastructure investments would tap into huge pools of money available to invest over a long time horizon. Long-term investment is key because the ability to amortise the high capital investment in fibre over many years makes viable projects that could not be funded by conventional corporate finance. In simple terms, it is analogous to the difference between buying a house for cash or by using a mortgage. Clearly the mortgage allows a much greater and earlier investment.
This paper explains the differences between corporate and infrastructure finance in basic terms and will discuss how Governments / operators could design projects to attract such funding. PPPs (public private partnerships) is briefly described which rely on such patient private capital.
Findings of funding fibre: Corporate verses Infrastructure Models are detailed in the following chapters:
- Corporate Finance
- Infrastructure Finance
- About Infrastructure Finance
- Dealing with Market Risk
- Public Private Partnerships (PPPs)
- Generic Value Drivers and Risks in an FTTH Project
- Practical Structures for Fibre Projects
- Concluding Remarks
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