Every European Digital

Every European Digital

� 1. Polish Market Competitive Landscape

� 2. Key issues for EU funding programs

� 3. Eastern Poland projects

� 4. Conclusion

Every European Digital

Bridget Cosgrave Bridget Cosgrave Bridget Cosgrave Bridget Cosgrave

� MOBILE :

� TPSA (FT)/”Orange”,

� PTC (DT)/“Era” now ”T-Mobile”,

� Polkomtel (Solorz-Zak) / “Plus”, Aero2/Mobyland:LTE / Centernet:MVNO P4 (Landisbanki) / “Play”

� CATV: UPC Poland/ASTER, VECTRA, Multimedia, plus more than 600 others

� DTH : Cyfrowy Polsat, Cyfra +, N

� FIXED/W’SALE : TPSA, NETIA/DIALOG, HAWES, EXATEL, GTS-CE, TK Telekom (Rail)

� LLU: AB Space Communications, CETI SC, EXATEL, GTS,

Firma Handlowo-Uslugowa KOMPEX, LUPRO, NETIA, PPHU POLTECHNICS, PT NOVUM, PTK Centertel, WDM Computers.

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� 5.7 % of the budget i.e. 3.7B€ of the ERDF

� Innovative Economy Priority VII & VIII: 1.9B€; 170M€ for bband

� Regional OPs 1.3B€, incl. 620M€ for Bband

� OP Eastern Poland 255M€ for Bband

� OP Infrastructure & Environment 150M€ for Bband in e-learning

� Total Broadband Investment 1B €, the largest in EU

� Also ongoing investment of private operators

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� Match the asset to the investor classMatch the asset to the investor classMatch the asset to the investor classMatch the asset to the investor class:� Long term assets need long term money

� Match the infrastructure to the marketMatch the infrastructure to the marketMatch the infrastructure to the marketMatch the infrastructure to the market::::� population density / competitive landscape� Benchmark “real speeds” EU = 4 MB EU = 4 MB EU = 4 MB EU = 4 MB POL < 2MBPOL < 2MBPOL < 2MBPOL < 2MB� Use existing infrastructure: don’t ignore satellite

� Match the subsidy to the subscriber needMatch the subsidy to the subscriber needMatch the subsidy to the subscriber needMatch the subsidy to the subscriber need:� DIGGING vs CUSTOMER PREMISE EQUIPMENT

Every European Digital

� Match the asset to the investor classMatch the asset to the investor classMatch the asset to the investor classMatch the asset to the investor class:

� Long term assets need long term money

� Communication Infrastructure Fund

Every European Digital

TrendsTrendsTrendsTrends

Growing bandwidth demand will force TELCO and CATV to increase investments

� Broadly speaking, POLISH telecom and cable companies are short term cashflow focused- Altnets are owned by Private Equity, high leverage, need

to optimise cashflows to service debt- TPSA FT is short term cash flow focused and have limited

appetite to invest in infrastructure

� Due to the sheer size of the investments needed will only be one party successful in making investments in FttH

� Access to fixed line infrastructure at low cost key to maintain competitive edge for fixed line business

Via service convergence, strategic value of owned infrastructure will diminish/change� IP as base technology enables data and voice traffic can be

serviced over a single infrastructure. On the medium term, infrastructures that can support TV have still a competitive edge

Regulatory pressure reduces advantages of owned infrastructure� UKE enforces network access at all infrastructures layers

Service providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providersService providers

Passive infrastructurePassive infrastructurePassive infrastructurePassive infrastructure

Operator networkOperator networkOperator networkOperator network

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� Passive infrastructure assets characterised by a long asset lifetime /

investment cycle and low volatility and technology risks.

� Utility-like characteristics provide for limited risk, highly predictable cash flows and a low cyclical long-term investment proposition to the owners and financiers of the infrastructure

� Infrastructure assets need constant investment and ultimately a path to optical fibre for the majority (but not all ) infrastructure:

◦ actively de-risks the infrastructure

◦ ensure a primary relevant infrastructure provider, now and in the future

� Assets can be leased whereby the utilization risk of the infrastructure is for the lessee (analogy to real estate type of leases).

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� Long term investments (10 - 20 year horizon)

� Stable returns: no or low utilization risk via lease agreements, no sharing of upside, fixed tariffs

� Low cyclicality: absolute return to shareholders due to providing access to basic communication services much needed in modern societies (utility character)

� Investment in asset class with growing demand for foreseeable future

� Mortgage value due to:

◦ Ongoing investments keeping asset always up-to-date (e.g., FttH investments)◦ Multi-tenant asset making fund less dependable on lessee◦ Infrastructure necessary to provide access to crucial communication services

� Immediate cash returns: brownfield approach leads to immediate strong dividend yield

� Inflation hedge: lease contracts are CPI-indexed

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� Match the infrastructure to the marketMatch the infrastructure to the marketMatch the infrastructure to the marketMatch the infrastructure to the market::::

� Population Density / Competitive Landscape

� Use existing infrastructure: don’t ignore satellite

Every European Digital

EED Every European Digital Slide 111/12/2011Bridget Cosgrave

EED Slide 121/12/2011Bridget Cosgrave

EED

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Slide 131/12/2011Bridget Cosgrave

EED Slide 14Every European Digital1/12/2011Bridget Cosgrave

EEDInput PwC

Households without coverage from mobile and fixed infrastructure – real rural households

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EED Every European Digital Slide 161/12/2011Bridget Cosgrave

Proste i skalowalne, finansowo optymalne rozwiązanie dla obszarów

o gęstości zaludnienia od 1 do 20 gospodarstw domowych na km2

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przedziały gęstości zaludnienia

1/12/2011

� Hybrid fibre-satellite solution fits EU guidelines:

◦ “Existing infrastructure" should be preferred

◦ Inter operator competition & select "best economic offer"

� Satellite infrastructure is already in place, enabled by private

investments of ESOA association members.

� Satellite usually presents 'best economic offer' for low density

population or remote areas

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� Match the subsidy to the subscriber needMatch the subsidy to the subscriber needMatch the subsidy to the subscriber needMatch the subsidy to the subscriber need:

� DIGGING vs CUSTOMER PREMISE EQUIPMENT

Every European Digital

EED

• Compared to fibre rollout – very cost effective

• BEST PRACTICE EXAMPLES:

• Nordnet France http:www.nordnet.com

50K Subs;

• Xplornet Canada http:www.xplornet.com

• 75K Subs;

Every European Digital Slide 211/12/2011Bridget Cosgrave

� 3 operatorów satelitarnych:

� 2011-2015 MASSIVE INVESTMENTS

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� Infrastruktura satelitarna jest dostępna, dzięki prywatnym inwestycjom członków organizacji ESOA www.esoa.net

� Satelity stanowią ofertę najbardziej korzystną ekonomicznie dla terenów o małej gęstości zaludnienia i obszarów chronionych NATURA 2000

� Hybrydowe rozwiązania światłowód-satelita w sieciach dystrybucyjnych powinno zostać uznane za równoprawne rozwiązanie w projekcie SSPW

� W celu wyrównania szans, projekt SSPW powinien jasno określaćmożliwości publicznego wsparcia dla zastosowania sprzętu satelitarnego w węzłach dystrybucji, zgodnie z polityką UE

23Bridget Cosgrave Bridget Cosgrave Bridget Cosgrave Bridget Cosgrave 1/12/2011

� Match the asset to the investor classMatch the asset to the investor classMatch the asset to the investor classMatch the asset to the investor class:� Long term assets need long term money

� Match the infrastructure to the marketMatch the infrastructure to the marketMatch the infrastructure to the marketMatch the infrastructure to the market::::� population density / competitive landscape� Benchmark “real speeds” EU = 4 MB EU = 4 MB EU = 4 MB EU = 4 MB POL < 2MBPOL < 2MBPOL < 2MBPOL < 2MB� Use existing infrastructure: don’t ignore satellite

� Match the subsidy to the subscriber needMatch the subsidy to the subscriber needMatch the subsidy to the subscriber needMatch the subsidy to the subscriber need:� DIGGING vs CUSTOMER PREMISE EQUIPMENT

Every European Digital

Every European Digital

26Bridget Cosgrave Bridget Cosgrave Bridget Cosgrave Bridget Cosgrave