1. The missing link The role of entrepreneurial capital in delivering future-proof broadband James Enck Budapest, 04/12/13

2. Who am i? Recovering sell-side analyst Migrated to principal investing at Merrill Lynch Corporate development consultant to CityFibre (UK) and BB Glasfaserfonds (DE) Analyst/advisory roles with OECD, KPN, Wentworth Capital, Seim & Partner, Diffraction Analysis, and Telco 2.0 Principal recent activities around fiber infrastructure, towers and datacenters Produce occasional rants at eurotelcoblog.blogspot.com

3. 2012 European FTTH/B rankings Two notable names are missing – UK and Germany, each below 1% penetration Source: IDATE/FTTH Council Europe

4. Punching below its weight Europe’s largest and strongest economy Consistent innovator in advanced and precision engineering and alternative energy technology Excellent transport infrastructure Very high levels of internet adoption FTTH/B penetration in 2012 0.5% Huge East/West and urban/rural divides in availability of >50Mbps broadband < 10% 10-50% 50-90% > 90% Source: BBP

5. Punching below its weight Principal global financial and media center European hub for international IP transit and home to major concentration of data centers Highest level of economic reliance upon the internet among the G-20 Very high levels of internet adoption FTTH/B penetration in 2012 0.06% Huge North/South and urban/rural divides in availability of >24Mbps broadband Source: Point-Topic, Akamai, CityFibre

6. The third way Delivering ubiquitous FTTH/B in both Germany and the UK estimated to cost €80 – 100bn Current levels of incumbent investment don’t come close Cable networks patchy and not expanding footprints The only answer is from third party, entrepreneurial capital

7. Successful precedent Reggefiber has invested c.€1.5bn over 10 years deploying FTTH networks in smaller towns and cities in Holland. Network covers >20% of all households. Company employs a successful pre-build demand aggregation program, ensuring penetration is at least 30% at launch. Earlier projects now 50 – 80%. Has drawn significant investment from the national incumbent and loans from EIB/Dutch banks. Source: Reggefiber

8. Changing the UK status quo Hyperoptic (founded 2011) Delivers up-to-gigabit services to large-scale MDUs in major urban centers Anchor relationships with landlords/tenant associations and demand aggregation Targets >500,000 households connected over the next five years Received £50m investment from George Soros’ Quantum Strategic Partners fund.

9. Changing the UK status quo Gigaclear (founded 2011) Delivers gigabit services to small (but highly affluent) villages in rural England, with poor DSL and no cable Replicates best practice in pre-build demand aggregation from Holland/Nordics Active in nine communities today, pipeline of hundreds Agreement with wholesale platform to increase service provider diversity

10. Changing the UK status quo CityFibre (founded 2011) Acquired legacy fiber assets in >50 towns and cities Anchor contracts with systems integrators serving the public sector for transformational metro fiber networks York network (pictured) now covers 111km and serves 179 endpoints Similarly-sized network now contracted in Peterborough Strong platform for FTTH/B extension?

11. Changing the DE status quo BBP a.k.a. BB Glasfaserfonds (founded 2012) Strong team of telco/SI/financial veterans acts as fund manager 1,400 communities (limited cable, poor DSL) fall into the investment parameters, deployment hierarchy driven by ROI Significant buy-in from incumbent service providers; ultimate goal is wholesale migration of existing DSL/PSTN customers Significant mitigation of build risk German population and communities by community size

12. The third and only way Two of Europe’s leading economies lack broadband infrastructure commensurate with their economic and political status There is an investment gap of tens of billions of euro in delivering ubiquitous fiber access to UK and German citizens and businesses Current infrastructure players face cannibalization risk, and can’t finance a total refresh of their infrastructure, even if they wanted to do it... The gap will be plugged by third party, entrepreneurial capital, targeting specific market niches Successful models mitigate construction and demand risks by locking in customer commitment pre-construction, and delivering a guaranteed minimum utilization level which gives investors comfort