Softbank turns its attention to Latin American start-ups

Softbank has announced the launch of yet another investment fund, this time turning its eyes towards the unfulfilled promise of Latin America.

Alongside the fund, the SoftBank Latin America Local Hub will also be created, an operating group which will help companies in the other Softbank portfolios enter Latin America, navigate the local markets and broaden their geographic reach. Yet again, Softbank CEO Masayoshi Son is attempting to prove he wasted decades in the telco space and should have been focusing on investment management.

“Latin America is on the cusp of becoming one of the most important economic regions in the world, and we anticipate significant growth in the decades ahead,” said Son.

“SBG plans to invest in entrepreneurs throughout Latin America and use technology to help address the challenges faced by many emerging economies with the goal of improving the lives of millions of Latin Americans. I am grateful to our Chief Operating Officer Marcelo Claure for leading this initiative, in addition to his other responsibilities at SBG.”

The SoftBank Innovation Fund will aim to raise funds totalling $5 billion, with Softbank contributing the first $2 billion, with a particular focus on e-commerce, digital financial services, healthcare, mobility and insurance.

For years, Latin America has been promised as a land of fortunes. With several economies on the verge of blossoming, the realities of the world have staggered success. Political controversies, violence, poor infrastructure and hostile environments have been some of the reasons this region has yet to properly flourish, however the statistics are on its side.

Since 2000, over 50 million people in the region have entered the middle class, increasing the amount of disposable income flowing around the local economies. Internet and smartphone penetration have grown considerably, to 375 million and 250 million respectively. E-commerce sales have jumped from $29.8 billion in 2015 to $54 billion in 2018, suggesting digital society is bedding in.

Combining all of these factors suggest there are fortunes to be made with the right execution. Many have failed to capitalise on the promise, but there has been renewed enthusiasm in recent years.

Liberty Global is excellent example of a company which seems to think this is a market set to burst. Over the last couple of years, Liberty Global has been trimming back its exposure in Europe, note its recent asset disposals to Vodafone in Germany and Sunrise in Switzerland, as well as spinning off Liberty Latin America as an independent, publicly-traded company. Chairman John Malone has built a successful business over the last few decades, and now he clearly spots something he likes in the Latin American markets.

Another interesting development is over at Telefonica. The Spanish telco is seemingly positioning Aura as a potential competitor to the Google and Amazon digital assistants, fighting to manage the consumer’s digital ecosystem, though initial launches have been focused on its Latin American business units, not its domestic market.

Latin America is a market which has consistently failed to deliver on the promise, but eventually the bubble will burst, and fortunes will be made. Whether this is another false dawn remains to be seen but laying the foundations for the future is not necessarily a bad move.

UK Government says company boards still don’t get cyber-security

The UK Government has released its 2019 ‘Cyber Governance Health Check’ which claims only 16% of executives have an understanding of cyber-security threats.

It might sound like the beat of an old drum, but eventually management teams will get the idea. Each week new reports emerge suggesting security is an under-appreciated and under-funded aspect of the digital economy, and this week the Government is throwing its own arguments forward. This report measured the attitudes of the FTSE-350 companies across the UK.

“The UK is home to world leading businesses, but the threat of cyber-attacks is never far away,” said UK Digital Minister Margot James. “We know that companies are well aware of the risks, but more needs to be done by boards to make sure that they don’t fall victim to a cyber-attack.”

While the report suggests 96% of businesses have a cyber-security strategy in place, this might prove to be somewhat of a misleading statistic, offering misplaced comfort. The presence of a strategy is irrelevant when the funds are not being appropriately allocated to put the plan into action. If only 16% of the purse-string holders understand the threat, appropriate investments are not going to be made, therefore the problem will persist.

“This report shows that we still have a long way to go but I am also encouraged to see that some improvements are being made,” said James. “Cyber-security should never be an add-on for businesses and I would urge all executives to work with the National Cyber Security Centre and take up the government’s advice and training that’s available.”

Awareness of cyber-security threats are increasing, 72% of respondents to the survey acknowledge the risk of cyber threats is high, and while this is an improvement on the 52% in the 2018 report, this number is still too low.

This is the position many businesses are in. Security is a recognised threat, but with many board members under pressure to produce profitability, funds are being directed to areas which will add to the bottom line. Security is not one of these areas, though the emergence of GDPR and changing consumer attitudes should help this.

Firstly, GDPR was introduced last year, though the first punishments are beginning to be handed out. As soon as board members start to see the hefty GDPR stick swinging, punishing those who are not deemed sufficiently prepared for a cyber-security breach, attitudes will change. The fines can be eye-wateringly high, and if you want to make an executive listen to you, hit them in the wallet.

Secondly, consumers are becoming more security-conscious. With breaches becoming more widely reported in the press and scandals drawing attention to data privacy demands, consumers (and enterprise customers for that matter) are becoming more aware of what should be considered adequate. Security will soon become a factor in the purchasing decision-making process, and companies will have to prove their credentials.

The tides are slowly turning, and soon enough the digital economy might be equipped to deal with the threat of the dark web. That said, with the astronomical pace of progress, you have to wonder whether the challenge is starting to become too big for the chasing peloton.

“Cyber-security is a mainstream business risk, and board members need to understand it in the same way they understand financial or health and safety risks,” said Ciaran Martin, CEO of the National Cyber Security Centre.

FCC and Oval Office locking horns over 5G

The FCC originally looked like a diligent foot-soldier for the President, but with the nationalised 5G infrastructure argument seemingly emerging again, heads are set to butt.

Reports have been emerging in various corners that the White House is revisiting plans to develop a nationalised 5G network, a plan originally raised in January 2018 to keep the US at the front of the technology arms race. The plan was shot-down back then, and the FCC has already raised set the tone of resistance through social media over the last week or so.

Following the President’s twitter rant last month, which saw the Commander-in-Chief bemoan progress being made by the telcos, FCC chiefs set their position out quite firmly.

In the case of FCC Chairman Ajit Pai, a retweeted message from 2018 reiterates a point which was made when the plans were first suggested; hands-off from the government is the best stance. This seems to be one of the only positions the Democrat and Republican representatives on the board of the FCC seem to agree on; the telcos should build the US 5G network, not the government.

Although the White House has not released any official statement confirming its favour of a nationalised 5G infrastructure, the defensive position entrenched by Pai and Commissioner Jessica Rosenworcel suggest there have been conversations which neither like. These tweets could be viewed as in-direct opposition, with the pair attempting to get ahead of the game.

According to Politico, this isn’t the only conflict which is emerging either. The Trump 2020 re-election campaign team have been pushing the benefits of a government-owned, wholesale infrastructure, while the current Trump political administration are keen to avoid the topic. While the disagreement is hearsay and reports for the moment, it would not surprise us if the Trump campaign led with such a promise.

This sort of political manoeuvre fits perfectly into the Trump playbook from his first election campaign. It hits pain-points for US citizens in the politically less-attractive states, the very people Trump was able to mobilise in 2016. However, attacking the digital divide in rural communities is not a new trick, Hilary Clinton used this tactic in 2016 also, but a nationalised 5G infrastructure will appeal to those who feel ignored by corporates. Trump has shown he can communicate effectively to those who believe they are under-represented by mainstream politics, and this angle could prove to be an effective tool.

The idea which seems to have been raised here is to create a wholesale network in partnership with a private third-party. The government would fund the deployment of the network, while the third-party would manage the operations and wholesale business, creating a system which would operate like the electricity market, with parties ‘purchasing connectivity’ on a rolling basis.

Theoretically, this position sounds wonderful. The arguments for nationalisation are often very compelling, and it could be justified as an effective way to spend tax-payers money. However, nationalised businesses and infrastructure have been shown to be ineffective time and time again. The government is not equipped to manage such projects in the long-run and not savvy enough to compete against private entities when they emerge. It might sound very appealing to voters who are stuck in the chasm of the digital divide, but it will not help the US in the global technology arms race.

As Brenden Carr, a Republican FCC Commissioner, notes above, private industry is the best way to secure a leadership position in 5G. This is a lesson which has been learned numerous times over the years in the US; when you leave private industry alone, simply creating a legislative and regulatory framework to encourage growth, much can be gained. In the technology world, this is perfectly evident with the success of Silicon Valley.

The dominance of the US on the technology stage is being widely challenged, though it seems the ego of the Trump party is getting in the way of logic. First to market does not necessarily mean the best, but this seems to be the angle which the President’s team is taking.

The big question is what impact this will have on the future for the Republican party. Should these rumours of a nationalised network evolve into reality, a split may well appear in the rank and file. The Republican FCC representatives are clearly not happy about this position, and neither are the science and technology advisors in the White House. However, you can’t argue that such a campaign promise would be very attractive to those who currently reside on the wrong side of the digital divide.

Here is what the Trump 2020 electoral campaign team will have to assess; is the long-term detriment of communications infrastructure a fair trade-off for the lure of ‘Middle America’ votes in the 2020 election? We suspect they won’t be looking much further beyond 2024.

Government to give Ofcom new stick swinging targets

The UK Government has unveiled a new consultation which will explore how it can encourage Ofcom to snap the whip, making sure telcos get their gears churning to meet connectivity targets.

Over the next decade, if the government manages to create a suitable amount of urgency across the telco industry, there will certainly be some progress made. The objectives currently set out are nationwide full fibre broadband coverage by 2033, while also increasing geographic mobile coverage to 95% of the UK by 2022.

Although this sounds very official, this consultation is more of a temperature check from the government. It’s asking the industry to give it feedback on its Statement of Strategic Priorities to reinforce its position and create a framework for Ofcom to work towards, ensuring the aims and objectives of the government and the regulator are on the same page.

In this consultation, the government is presenting its Statement of Strategic Priorities for a legally required 40-day consultation, which will validate and justify the aims, therefore providing a more stable foundation to bring Ofcom’s work in-line with government ambitions. This is a process which is required in other utility verticals and brings the telco industry more in-line with the stricter regulatory scrutiny which is placed on segments such as water and energy.

Aside from meeting the connectivity and coverage ambitions, the consultation will also look at how ‘loyalty penalties’, the price-creep which is placed on contract renewals, can be tackled. The telco industry is one which is geared towards customer acquisition, though many would like to see loyalty rewarded, instead of picking up the slack created by offers to lure customers away from competitors.

“As the UK’s telecoms regulator, Ofcom has a critical role in realising our shared connectivity aspirations for the UK,” said Secretary of State, Jeremy Wright. “As well as ensuring the necessary improvements to broadband and mobile services, consumers must also be protected. I urge Ofcom to tackle harmful business practices and remove barriers to switching.”

The ‘loyalty penalty’ is a highly emotive mission from bureaucrats and consumer champions to stop an age-old practise of the telcos, which is perhaps underhanded. It is effectively taking advantage of those who are not savvy-enough to search for a new deal, or those who might innocently and naively presume loyalty would be rewarded. Unfortunately, this is not the case in the telco space, an industry which has a woeful track record and outlook on customer experience and services.

In terms of improving mobile coverage, the up-coming Ofcom 700 MHz auction has caught the attention of the government. The auction will aim to sell off 80 MHz in the 700 MHz band, spectrum which is well suited for providing mobile coverage over wide areas and indoors. Ofcom is currently clearing this band of transmissions for Digital Terrestrial Television (DTT) and by wireless microphones used in the entertainment industry, though the plans are to have the spectrum free for mobile use by summer 2020.

Elsewhere in the consultation, rural roaming will be covered. Again, this ties back to empowering the consumer with greater connectivity and coverage, tackling the not-spots across the UK. Despite each of the telcos claiming progress in improving coverage, there are still plenty of not-spots across the UK where consumers only have the choice of one operator. Future proposals would aim to improve roaming agreements, to offer greater choice of providers to the consumer.

Finally, the consultation will ask for opinions on the current regulatory landscape. Central to this aspect of the investigation will be the suitability of rules and regulations to ensure the UK attracts investment.

While this might seem like bureaucracy for the sake of bureaucracy, it is a democratic nation ensuring all the boxes are ticked. The government has ambitions and objectives, though it is seeking validation from the community, before presenting a mandate to Ofcom to ensure it is regulating the industry in the way the government feels is most beneficial for society on the whole.

User backlash after Tencent’s Reddit interest

Chinese internet giant Tencent is reportedly leading the pack for Reddit’s Series D round, with the social media giant aiming to raise between $150 and $300 million, but not everyone is happy.

Reddit, a social media platform for news aggregation, web content rating and conspiracy theories, has been beating its chest to the press over the last couple of weeks to drum up interest for the funding round. According to Alexa website rankings, Reddit is the 17th most visited website worldwide, while it claims to have 330 million monthly active users, 138,000 active communities and 14 billion page views a month.

And it appears to have caught the attention of one of the worlds’ fastest growing internet businesses. According to TechCrunch, Reddit is hoping to raise between $150 and $300 million, which would value the platform between $2.7 billion and $3 billion. Details are thin for the moment, but what is worth remembering is the Tencent stake would be relatively minor.

That has not stopped criticism on the platform from users however. Many are linking the Chinese distaste for free speech with the demise of Reddit. Some are using the freedoms afforded by the Reddit platform to voice their concerns that Tencent might be able to block certain conversations and impose some levels of censorship. Reddit is currently blocked by the Great Firewall of China, though some fear with Tencent’s involvement the censorship could be extended elsewhere.

What is worth noting is Tencent is not acquiring the business but investing in it. Depending on the total amount pumped into Reddit, Tencent will certainly gain some influence from a strategic and development perspective, all investor do to a degree, but it will be very limited. Another factor to consider is that depending on the type of shares which Tencent acquires, it might not even be granted a seat on the Board of Directors.

That said, such is anti-China rhetoric around the world, this deal will catch the attention of politicians. There is perhaps little which can be done to prevent the investment, though the involvement of a Chinese business might bring greater scrutiny down on Reddit. While it has not be the centre of any scandals to date, it certainly does have the capability of influencing a wide, deep and highly engaged audience. The success of the business will partly rely on the management team’s ability to manage this new dynamic with politicians.

While Reddit is one of the most popular social media platforms on the internet, it is rarely considered in the same bracket as sites such as Facebook or Twitter. The number speak for themselves, though as the site does not look anywhere near as polished and as it does not feel as overtly commercial, it has snuck under the radar to escape the same scrutiny which is placed on the other platforms. We suspect this will change over the coming months however.

Recently the business has been going through somewhat of a refurbishment to take it into the big leagues. With a site redesign, the introduction of a native video player and the team has started to sell cost-per-click ads in addition to promoted posts, cost per impression and video adverts, it is starting to get the feel of a genuine internet business. This, alongside investment from a Chinese company, might bring it more to the attention of governments and regulators, many of whom are attempting to crack down on internet companies.

For Tencent, this is an investment which makes sense. Having created a monstrous business in China, primarily through the influence of WeChat and QQ, the team is looking to spread its wings in the international markets. There certainly has been some organic growth into the international space, though Tencent has certainly not been shy about investments and acquisitions.
Over the last few years Tencent has invested in several game developers including a minority stake in Robot Entertainment, videogame developer and publisher Glu Mobile paying $126 million and 84.3% of Finland-based developer Supercell for $8.6 billion. The firm also has holdings in Riot Games, Epic Games and Activision Blizzard. All of these titles have increased the presence of the firm in the international arena, as well as its influence in the data economy.

While expansion into the international arena is nothing new, attempting to muscle into the social media and news aggregation segment has got a few people anxious. Considering the Chinese approach to freedom of speech, Tencent’s involvement in Reddit has gotten a few users asking questions, while governments are bound to wade into the equation sooner rather than later.

Vodafone puts the brakes on core Huawei spend

There aren’t many things that could rival Huawei’s headaches derived from government bans, but a snub from another one of the worlds’ largest telco groups might be up there.

With 275 million customers around the world, plus another 250-odd million through joint-ventures, this is one of the biggest telcos in the world. With networks spreading across Europe, Africa and Asia, the buying power and influence of Vodafone is considerable. This could a massive blow to the prospects of Huawei, both financially and in terms of credibility.

Speaking on the earnings call last week, CEO Nick Read stated the following:

“Specifically on Huawei, what I was really trying to make clear is, I think we need to move to more a fact-based conversation, I think at the moment is a simplistic political level and there is a big distinction between radio and core. We are predominately using Huawei in radio. We are continuing to use them in radio for 5G. However, in the core, we have put them on pause. They are not significant in the scale of our operations in the core and therefore it’s not a big financial implication.”

This is where Huawei finds itself in a difficult position. In numerous markets it is still fully free to compete for on-going 4G and up-coming 5G contracts, though these telcos will question the risk. Does the benefit of working with Huawei outweigh the risk? Why spend money on kit when you might have to strip it out in the near future?

As it stands, Vodafone does not have a huge level of exposure in terms of Huawei in the core, this is the case for most European telcos, though should the ban extend to radio or transmission this might become a significant issue. A full-scale ban is certainly not out of the question, very little is when you consider how aggressive and antagonistic the current political climate is, and this could send ripples throughout the ecosystem.

Vodafone confirmed to us Huawei equipment is in the core in some minor markets and Spain, and this is where the pause is relevant. Huawei will continue to supply Vodafone with equipment in other areas. In this sense, the fallout should be contained. Just to put things in perspective, Vodafone’s position is similar to that many telcos around Europe are taking.

However, as Read notes, should a ban extend to other areas of the network it could proves to be a sticky situation for everyone involved.

“Clearly, if there was a complete ban at the radio level then it would be a huge issue for us, but it would be a huge issue for the whole European telco sector,” said Read. “And what, Huawei have probably, what 35% market share through the whole of Europe, so I think that is a totally different consideration, but we now need to make a lot more fact-based conversation.”

The point which Read is making is a logical and incredibly important one. Too many people are getting swept up in the political rhetoric and not looking at the facts which are on the table. The negativity surrounding Huawei is starting to snowball, but little (if any) hard evidence has been put on the table. People are forgetting about the facts, instead contributing to the momentum.

What businesses like Vodafone need is certainty. The political see-sawing with Huawei is not providing much confidence for the telco to appropriately invest in networks. If this has a negative impact on the performance of the networks in the future, the politicians will be the first to point the finger of accusation at the infrastructure owners. The perfect storm of disaster and disorganisation is started to develop.

Vodafone and O2 UK buddy up over 5G infrastructure sharing

Vodafone UK and Telefonica UK (O2) will be entering into a new infrastructure-sharing relationship ahead of the much-anticipated 5G rollout.

The duo already has an existing relationship for shared infrastructure activities, managed through the Cornerstone Telecommunications Infrastructure Limited (CTIL) joint venture, with this extension to include 5G at joint radio network sites. In theory, such a tie-up will allow the pair to accelerate 5G rollout plans over the coming months.

“We believe that these plans will generate significant benefits for our business and our customers as we move into the digital era of connected devices, appliances and systems on a mass scale,” said Nick Jeffery, CEO of Vodafone UK. “Customers will benefit from the best 5G experience available and we will deliver even faster speeds by using our spectrum holding more effectively.”

“I’m excited by the potential of these plans to meet the future needs of our customers while delivering value for our business,” said O2 CEO Mark Evans. “In addition, these plans would allow us to utilise the spectrum we acquired in the last auction very effectively.”

Looking at the 5G ambitions, both companies are being relatively coy with the specifics. Vodafone has confirmed it will launch commercial 5G services during 2019, exactly when is unknown though, while O2 has already stated it will not enter the fray until 2020. For Vodafone, some industry analysts have commented it is pitting itself in a race with EE, suggesting the launch would be at some point during early summer.

Perhaps this is an indicator of the importance of 5G scale. Being the first to market may not mean anything in the long-run, it’s a gimmick to include in advertising more than anything else, but nationwide deployment will be critical. O2 has a marketing leading position to protect, while Vodafone wants to recapture the fortunes of yesteryear. Clearly offering the 5G network with the widest coverage will be critical to winning subscribers once 5G vaults towards mass market adoption, and this partnership seems to have an eye on that.

As part of the agreement, more responsibilities will be devolved to the CTIL, allowing the JV to improve the efficiency of its operations and pursue opportunities to add further third-party tenants to the assets. The companies also intend to upgrade their transmission networks with higher capacity optical fibre cables, readying the infrastructure for low-latency use cases such as VR, while there is also an eye on future transmission operating model which could drive synergies for investment and operations.

Although trying to get telcos to play nicely with each other is a tricky task, the idea of shared infrastructure has been on Ofcom’s agenda for some time. It might create a bit of a red-tape maze in the first instances, though there are clear benefits to the concept.

“UK 5G roll-out is on the way and operators need to be more accepting of sharing infrastructure to ensure that coverage demands from consumers and businesses can be met as quickly as possible,” said Ingo Flomer, VP Technology at Cobham Wireless.

“Deploying new 5G networks typically require operators to install and maintain new antennas, hardware and cables, which requires significant planning, management and expense. By using one common architecture, operators can minimise cost and disruption.”

Fears the highly dense urban areas will be favoured over rural regions will certainly not be dismissed following this announcement as the cities are still much more attractive commercially, but with such partnerships the delay might not be as painful. A digital divide was created by the slow rollout of 4G, but shared-infrastructure relationships should ease this chasm, at least theoretically.

Cybersecurity investments on the up but not sustainable – study

Research from Strategic Cyber Ventures points to an increased appetite for cyber security investments, but the euphoria sweeping the segment forward is not sustainable.

On numerous occasions we have commented security is the ugly duckling of the technology world. It is critical to ensure the industry, and digital society on the whole, functions appropriately, though more often than not it is ignored. There will be numerous reasons for this, perhaps because security is a thankless and often impossible task, but the data suggests 2018 might have been a watershed year.

Not only did 2018 see $5.3 billion in global venture capital funding, 81% more than 2016, M&A activity increased as did private equity investments. On the M&A side of things, Cisco made a bang with a $2.4 billion acquisition of Duo Security, while Blackberry acquired Cylance for $1.4 billion. These are two of the larger deals, though there was increased activity in the segment across the period.

In terms of private equity, Barracuda Networks was acquired for $1.6 billion by Thoma Bravo, Bomgar by Francisco Partners for $739 million, while Blackrock spent $400 million on Cofense. Elsewhere in the more complicated financial world, Skyhigh Networks acquired McAfee with assistance from its financial sponsors Thoma Bravo and TPG Capital.

Cybersecurity one

Overall, the trends for the security segments are heading in the right direction. Perhaps now this is an area which will be taken more seriously by the industry, with adequate investments heading into security department.

That said, Strategic Cyber Ventures has warned the trends from a funding perspective are not exactly the most favourable. The amount of cash being invested is increasing, though it does not appear the rewards are reflecting this. Some of these companies have raised funds through big rounds, but growth has slowed, perhaps due to vendor fatigue or increased competition. The risk here is firms cannot raise additional funds at increased valuations from prior rounds, meaning they will have to lean on existing investors. Eventually these parties will grow tired of keeping them alive for minimal rewards.

The issue here is the need and hype around security. Its critical to secure the expanding perimeter of the digital economy, creating the need for the segment, while executives constantly talk about security being a number one priority of firms, creating the hype. This would seem to be the perfect recipe for investment in security companies and start-ups. However, the segment hasn’t taken off, perhaps due to the preference of customers investing in technologies which will make the company money as opposed to more secure?

This is maybe the most accurate assumption on why the security segment has faltered continuously over the years. Companies have limited spending power with executives choosing to invest in areas which will make the company more profitable, such is the pressure from investors and shareholders. However, consumer attitudes might be changing.

While many would have ignored the security risks of the digital economy in years gone, today’s consumer is more educated. Privacy scandals have demonstrated the power of data forcing the consumer to consider security more critically. This might have an impact on future buying decisions.

According to research by Onbuy.com 60% of US and 44% of UK consumers believe there is a risk to personal safety in the sharing economy, while 58% of all the respondents believed the risks outweigh the benefits in the sharing economy. Such attitudes will force companies to consider their security credentials as there is now a direct link back to the bottom line.

What this means for VC funding and investments from around the ecosystem remains to be seen, though the tides are turning in favour of the security segment. As Strategic Cyber Ventures notes, the current levels of investment are unsustainable, but there certainly are rewards.

Infracapital secures SSE Enterprise Telecoms stake

Infracapital has become the latest investment firm to secure a stake in the increasingly popular connectivity industry with a £380 million investment in SSE Enterprise Telecoms.

The deal will see Infracapital secure a 50% stake in the SSE Enterprise Telecoms business, with £215 million to be paid on completion of the transaction, the end of June, and up to £16 million in a series of instalments depending on the performance of the business in the future.

“Infracapital’s investment in SSE Enterprise Telecoms shows the confidence it has in the future growth of the business,” said Colin Sempill, SSE Enterprise Telecoms MD. “It recognises the success we have achieved to date, building out a great network, winning notable contracts and being relentlessly focused on customer satisfaction. Both parties see this as an opportunity to help develop the network infrastructure that this country needs to turn the vision of the UK’s digital economy into reality.”

“High-speed connectivity is vital to economic growth and prosperity and we are delighted to announce this partnership with SSE plc.,” said James Harraway, Infracapital Director. “SSE Enterprise Telecoms is an established telecoms infrastructure provider and is well positioned to support growth in this critical sector. Infracapital has considerable expertise of investing in digital infrastructure and we look forward to working closely with our new partners as the business continues to grow, deliver new projects and expand its networks.”

While SSE Enterprise Telecoms is not necessarily a heavyweight on the UK’s connectivity scene, this investment is just another example of financial firms becoming increasingly interested in alternative network providers, or Alt-nets. Hyperoptic is another example, having secured £250 million from eight international banks to extend its full fibre optic network, while CityFibre secured a debt package of £1.12 billion last month, after being bought by a Wall Street investment consortium in April.

More than anything else, this is an indication that perhaps things are not going as badly in the telecommunications as some would have you think. It might be going through a rocky time competing with the OTTs, regulations might not be going all the right directions and revenues are not growing at a rate of knots, but such investments show there is confidence in future success. The industry has demonstrated consumers are willing to pay for larger data bundles and fibre connectivity, and now the financial industry is listening more acutely.

For the Alt-nets and the consumer, it is a great sign. Securing more investments in the business, especially from those organizations which are not necessarily chasing the short-term pay out, will provide more security around CAPEX and deployment plans. It might not be the most exciting news from today, but it perhaps some of the most reassuring.

CityFibre bags £1.1bn for nationwide fibre rollout

During yesteryear, CityFibre was known for moaning for the sake of moaning, but in securing a debt package of £1.12 billion, the firm’s ambitions are starting to look very real and very interesting.

Seven banks have financed the transaction, ABN AMRO, Deutsche Bank, Lloyds Bank plc, Natixis, NatWest, Santander and Société Générale, which will serve as the first installment of CityFibre’s £2.5 billion commitment for a nationwide fibre rollout. CityFibre has given itself a target of providing fibre to five million homes, a third of the Government’s target of 15 million, by 2025.

“The appetite from these institutions to support our financing is further evidence that CityFibre’s strategy is the right one for the UK,” said Terry Hart, CityFibre’s CFO.

“As our networks are rolled out, this will benefit everyone, driving innovation and increasing fibre penetration across the UK, providing the future-proof digital connectivity the UK needs. CityFibre’s target to reach five million homes by 2025, as well as thousands of businesses and public-sector sites, will catalyse huge economic growth in regional towns and cities across the country.”

CityFibre made it abundantly clear in its statement that this is an endorsement of the firm’s business model from heavy hitting financial institutions, and perhaps it does indicate a change in attitudes from investors.

Back in October, we attended an investor panel session at Broadband World Forum featuring the likes of the European Investment Bank and also Amber Infrastructure, a specialist venture capitalist firm. The message was clear from this panel session; investors are increasingly happy to fuel fibre rollouts as the business case has been justified and consumer demand has been validated.

This is where CityFibre sits. It doesn’t want to be a telco but become a serious infrastructure player. Owning the relationship with the consumer is of zero interest but creating a nationwide alternative to Openreach and becoming a connectivity wholesaler is the big picture. However, to be considered a viable alternative, there needs to be more of a presence than there is today.

Telcos don’t want to have a patchwork of relationships across a country to meet the connectivity demands. Multiple relationships create more overheads and more opportunity for something to go wrong. CityFibre has made good progress in rolling out fibre spines in numerous areas across the UK, but the gaps will have to be plugged if it wants to be a viable and realistic alternative to Openreach.

That said, CityFibre is looking like a business which has the right ingredients for a market which is primed for disruption. Aggressive ambitions, a head-strong CEO and the confidence of being owned by one of the world’s most powerful businesses. CityFibre is a very strong contender to make a genuine and permanent dent in the connectivity infrastructure game.

And a £1.1 billion investment from seven major financial institutions is a very good place to start.