Well, it has been a busy week on the telecoms infrastructure front!
After the reaffirmed political commitment of our new Prime Minister to ensure UK has full fibre by 2025, followed the renewed pledge by Virgin/Liberty Global to build fibre (https://www.ft.com/content/ae184e7e-ae00-11e9-8030-530adfa879c2) and O2's annoucement that it intends to invest in fibre (https://www.ft.com/content/7cca265e-aed6-11e9-8030-530adfa879c2).
If this was not clear enough from the last 18 months to 2 years, the pace of change in telecoms infrastructure is accelerating.
There are a number of interesting features here, some being more pronounced in the UK, like the frenzy for fibre as the territory is less covered by fibre than our European neighbours.
The first interesting feature is that telecoms infrastructure (be it fibre or other) is increasingly considered as a class of assets in itself attracting an expanding interest from infrastructure funds. This has resulted in a string of acquisitions but also in debt raises featuring "hybrid factors" of corporate finance and infrastructure finance.
The second is a split between infrastructure and service. The main reason is that models for each type of business are actually quite different. A number of telecoms companies are therefore either divesting of their infrastructure assets outright or creating split organisational structures.
TDC made headlines this year when it effected such a split. And the new trend was all the talk at the latest TMT Finance M&A Conference in May of which CMS chaired a couple of sessions. The Vodafone announcement today is well in line with this trend.
The third is the slow progress towards network sharing, doing regular headlines too. This seems to be an inevitable conclusion if we wish to build quickly a new infrastructure telecoms network that can support the hunger for data of a society which is more and more intensily digitalised and the evolution towards 5G. Yet there is only timid support from regulators in this direction.
No doubt more news on this front once the new head of OFCOM is appointed!
Vodafone could float its European towers business in London within 18 months in what would be a blockbuster move to create the continent’s largest independent mast company.