The roll-out of fibre networks in Germany is being driven by a wide variety of companies, whose financing options differ considerably in some cases. Whilst large, listed companies can draw on the bond market and stable cash flows from existing business areas, smaller and investor-financed providers are often reliant on more expensive project financing. This spotlight uses a model calculation to examine how the resulting differences in the cost of capital affect the economics of FTTB/H roll-out.
In a model roll-out area, calculated over a 20-year period, a conservative estimate yields a difference of around 3 euros per month per active connection. Project-financed companies can only offset this competitive disadvantage through higher average revenues, take-up rates, lower roll-out costs and/or lower margins. A deterioration in financing options could therefore have a particularly negative impact on the completion of ongoing projects and the launch of new projects by project-financed operators, and consequently on fibre roll-out competition and the achievement of broadband targets across the market as a whole.
