Government policy has held UK back in pursuit of digital economy

While the investment climate for connectivity infrastructure has certainly been improving in recent years, a proactive and prioritised government is critical to ensure rapid evolution to the digital economy.

Across the world, the climate for investment in connectivity infrastructure is improving. There is plenty of demand from both the consumer and governments to build the business case for deployment of fibre infrastructure, though more could still be done in certain markets.

“The digital economy does not work without the government, especially in the rural areas,” said Dick Van Schooneveld of Mahler Corporate Finance at Total Telecom Congress this week.

This is the challenge which some telcos and governments are facing when it comes to attracting investment; the political and regulatory environment is not always very helpful. There are some bright spots across the world, Portugal for example as well as Sweden or South Africa, but some are lagging considerably.

According to Mikael Sandberg, Chairman of VX Fiber, the political and regulatory climate in some nations, such as the UK, has been a point of suffocation when it comes to investments in connectivity infrastructure. This has allowed other nations to leap-frog the UK in pursuit of the riches promised by the digital economy.

The difference between these nations which have made strong progress and those who are lagging, is the ambition of the governments involved and the ability to see the bigger picture. In Portugal or Sweden for example, public/private partnerships to invest in full-fibre infrastructure might expensive but it is very attractive in the long-run.

Sandberg suggested more than 50% of Swedish enterprise organizations have adopted full-fibre connectivity products and the benefits are significant from a productivity perspective. The more successful these businesses are, the more jobs which are brought into the economy and the more tax which is contributed back to the government.

The gains are quite clear both in terms of revenue for the public coffers and political capital gained in the eyes of voting citizens.

And while there are clear and measurable benefits through prioritising such investments, the likes of the UK and Germany have suffered. There have been policies in play which have steered the government away from such lavish spending, austerity measures in the UK for example, though the repercussions of these decisions are perhaps being felt now.

There are still many questions which need to be addressed to fully understand and appreciate the impact of the digital economy, and of course many areas which need to be tackled to mitigate the risks. However, will the right political climate, connectivity infrastructure is looking like an attractive investment to the money men. Unfortunately, there are still countries which haven’t balanced the equation.

Altice raises €2.5 billion by flogging some towers

Debt-riddled French telco conglomerate Altice has raised some much-needed cash by selling stakes in two of its tower holdings to private equity.

The the total cash consideration is €2.5 billion, with KKR getting half the French towers business, while three quarters of the Portuguese towers business are being snapped up by Morgan Stanley and Horizon. There is much talk of what a good deal this is and how it will enable the relevant bits of Altice to focus on their core stuff, but this is all about eating into its massive debt pile in a bid to repair the catastrophic damage it experienced last year.

“I am enthusiastic about creating new tower partnerships in France and Portugal,” said Altice founder Patrick Drahi. “With KKR, Morgan Stanley Infrastructure Partners and Horizon Equity Partners, we have found long-term partners of the highest-quality who share our vision to invest in leading infrastructure and growth opportunities.

“We will create a leading European tower business, including the number one in France. Both tower businesses will be uniquely positioned to grow as they provide increasingly important infrastructure services to operators in both markets. Simultaneously, these transactions underline our commitment to delever and proactively manage our balance sheet while highlighting the significant underlying value of Altice Europe’s business.”

If Drahi hoped this move alone would have a profound effect on Altice’s share price he must feel pretty disappointed as it has been met with a distinct shrug. The French tower joint venture is called SFR TowerCo, but Altice stock is far more sensitive to the fortunes of the SFR telecoms business than a few towers, and that remains a challenge. You can read further analysis of the move at Light Reading here.

Cisco gets thumbs up from Portugal

Cisco has followed up a successful week in Spain by signing a memorandum of understanding with its neighbour Portugal.

The new agreement will see Cisco work with the Portuguese government over the next two years to ready the country for the digital economy. The brief is quite broad, but some of the highlights include improving economic growth, education, innovation, and competitiveness as well as social inclusion and quality of life.

“By accelerating the national digitization agenda, Portugal can increase GDP growth, create jobs, and improve digital inclusion for our people and businesses,” said António Costa, Prime Minister of Portugal. “We strongly welcome Cisco’s contribution to create a sustainable innovation ecosystem that will enable our country to better compete in the global digital economy.”

“Cisco is proud to partner with Portugal’s government, businesses, and citizens in their commitment to digitize the nation and become a European leader in digital transformation,” said Chuck Robbins, CEO of Cisco. “We are committed to helping accelerate the Portuguese ecosystem of talent, entrepreneurship, and innovation that is key to creating a digital Portugal, and can bring even greater value to the country.”

Looking at some of the specifics, Cisco will partner with Startup Portugal focusing on areas such as security, mobility, and Internet of Things. The US technology giant will also provide local start-ups with access to its European Venture Capital initiative and Incubation program to help accelerate business and expand internationally. The agreement will also see Cisco supply products and services to several ministries, with a focus on public administration modernization, health, justice, and defence.

Another area of interest will be the four-year Industry 4.0 plan launched by the Portuguese government recently. The plan focuses on tourism, transportation, cities, and regions, with the aim being to improve services to citizens, visitors, and businesses, as well as to help competitiveness and operational efficiency. Part of this plan will include work with Turismo de Portugal to take advantage of wifi with analytics to improve experience and attract more visitors to the tourist hotspots in Portugal.

A few questions have been asked of Cisco in the last couple of days, namely focused around how recent product releases which essentially undermine Ericsson’s place in the radio segment. The gloriously named ‘Multi-Vendor Open vRAN Ecosystem Initiative For Mobile Networks’ is a direct alternative to single-vendor RAN offerings, and does offer a bit of a slap to Ericsson. Many had speculated the partnership between the two was on shaky grounds, but with Cisco’s radio initiative it looks dead and buried. Can a co-operation continue when one half of the partnership is taking a swipe at the others core competency?

Cisco might be facing awkward questions regarding its partnership with Ericsson, but at least good news stories like this will deflect some of the attention.