EU launches banking-led fund for broadband infrastructure
Mon 12 Dec 2016
The European Union has announced the launch of a major fund intended to improve broadband infrastructure and coverage, working initially with major banks from France, Italy and Germany.
The Connecting Europe Broadband Fund will act as an investment platform for both public and private institutions, and launches with three anchor investors: Cassa Depositi e Prestiti in Italy; Caisse des dépôts et consignations in France; and KfW Bankengruppe in Germany.
The initiative is intended to address Europe’s connectivity blind spots, mainly rural areas with inadequate or no mainline broadband facilities – typically unattractive prospects for private industry investment.
The EU estimates that the Connecting Europe Broadband Fund will raise a minimum of €500 million (approx. £419 million) via public and private investment at first closing, and the European Commission itself will expend €100 million into the project via the Connecting Europe Facility.
The CEBF will be open to financial institutions at the level of National Promotional Banks and Institutions (NPBIs), with the aforementioned European banks having already expressed interest in anchor investment.
The CEBF also represents the first platform of its kind to back network infrastructure under Europe’s flagship Investment Plan for Europe scheme. The project will be open to diverse sources of market funding, as well as project financing directed in by its anchor investors. The fund intends to invest in equity and quasi-equity holdings, including subordinated and mezzanine debt, over an estimated 7-12 broadband projects per year covering the period 2017-21. By the end of that time, the fund expects over 20 countries to have benefitted from the scheme.
Commissioner for Digital Economy and Society Günther H. Oettinger, commented on the announcement:
“I am grateful to our financial partners for the establishment of this broadband Fund. It is an important development for smart and efficient funding of broadband projects, especially in underserved areas, in line with the spirit and the letter of the Investment Plan. It is a great step towards a European Gigabit Society for all.”
Mid-2017 will see the initial operational launch of the CEBF, which will be managed via Cube Infrastructure Managers S.A., an independent Luxembourg-based company which focuses on investments in European infrastructure.
Investment size is estimated to range between €1 million and €30 million, for an aggregate expenditure not likely to exceed €150 million. A fund manager for the scheme will be appointed early in 2017.
The portal fund was anticipated in the European Union September report, Towards a European Gigabit Society, which noted the ‘fragmentation’ of high-speed connectivity throughout the European region, and how the usage and business cases for broadband have developed in unanticipated ways since the EU Telecoms Regulatory Framework was last revised in 2009.
The September report’s impetus also contained promise of a ‘Wi-Fi For Europe’ initiative to help boost the region’s digital economy and, effectively, to make connectivity as ubiquitous as water provisioning in Europe.