Gabrielle Gauthey, VP Investment and Local Development

Caisse des Dépôts

February 13th 2018

FTTH Conference 2018, Valencia

Caisse des Dépôts convictions and role

• Caisse des Dépôts has been a major investor in FTTH in France, and a key proponent of the wholesale only model over a period of 20 years.

• We see Network as an essential infrastructure.

• Analysis has shown that there is no economic viability for two competing

passive infrastructures on around 80% of the French territory. There is however considerable scope for competition at the active layer

• France provides a case study which illustrates within one country the effects of leaving deployment entirely to the market vs managing deployment through local public initiatives

What are we talking about ? Telecom network structure : a layered model

Services, Content & Apps (residential, public & business)

Active Network

(network equipments, business & operation support)

Passive Infrastructure

(trenches, ducts, fibre)

End-user

>200 B€

Investment

needed Payback

Few m-3 y

5-7 y

10-15 y

20%

80%

Each layer has a very different financial profile and needs to be addressed adequately

very low

Indication of sectorial funds focus

over the next two years

0 1 2 3 4 5

10.Infrastructure

services

1.Energy

2.Roads

3.Rail/Metro

4. Harbours

5.Airports

6.Water

7.Waste

8.PPP/PFI

9.Telecoms

Conditions for infrastructure

funds to invest

Investors seeking exposure to a periodic,

stable and guaranteed cash flows

Need for a regulated market with

contained competition and strong barriers

to entry

Necessity to make investments fit with

infrastructure funds’ risk profile:

Advocate for separation of passive layer

vs. active and retail to lower risk on the

passive layer part

Guarantee of a single fibre network in

case of operating cable operators

very

high

Source: Contribution, Deloitte 2010, Arthur D. Little

COMPETITION

AND

INCENTIVE

FOR

INVESTMENTS

Until recently no fit between conditions for investments and investors

Situation in France The “3-Areas model”- update

~ 1,9 M

9 M 1,6 M

Under deployment

or low density in

very dense areas Deployment intentions

Very dense Areas (4,7 M deployed households*/

6,3 M total)

« AMII » Areas (3,7 M deployed households*/

12,7 M total)

« Public Initiative » Areas (PIN) (11,7 M households involved /

17,3 M total)

Wholesale

Operator

Retail

Operator

To be

launched

Multi-local Operators

1,3

M

0,7

M

ongoing

Cable

networks

No

cable

Non-contractual

lines of allocated

« RIP »

~1,5 M

No

cable

VHB other

technos

(MeD,

radio…)

Call for

tenders

Cable

networks

Cable

networks

Cable

networks

Caisse des Dépôts mobilized for fixed high broadband and very high broadband coverage of territories

► Caisse des Dépôts played an important role in defining

business models for the public initiative deployments by setting

criteria under which it would provide funds

► First criterion is to minimise public money

► Open access, neutrality

► Caisse des Dépôts invests in 2nd generation Public Initiative

Networks (PIN) bringing optical fiber to subscribers, after

investing in 1st generation networks (collecting, unbundling

and serving companies)

► Caisse des Dépôts is a shareholder of 48 project companies in

France :

* 31 “PIN” 1G

* 17 “PIN” 2G

► Caisse des Dépôts has invested more than € 340 million in

equity for more than € 4 billion in investments

CDC prefers wholesale only models without any

engagement in the retail market

Multiple intervention tools for digital development and Very high broadband

Industrial tool for the resorption of mobile white areas, already present in Ariège, Oise, Vosges ...

+ € 340 million of equity invested in the capital of delegated project companies

New 100% fiber operator dedicated to « PIN », already present in several french regions such as, Calvados, Alsace, Sarthe, Somme, Aisne, Doubs, Essonne, Nord-Pas-de-Calais ...

USAGE

DEVELOPMENT e-education, e-tourism

e-health, datacenter, …

Loans from “savings funds” offered to local authorities

€

Example of projects in France… “Hauts de France” DSP FttH affermo-concessive - SMO La Fibre Numérique 59-62

Caisse des Dépôts partner of « SPV THD 59-62 »

4 /11/ 2016 : DSP signature

Contract length : 25 years

Start and completion of work : 2016 to 2022

Key milestones

Key figures

681 000 FttH lines in 6 years timeframe (537 000 concessif,

144 000 affermage)

900 M€ investments (22% public / 78% private)

Caisse des Dépôts

32 M€ equity

15%

30%

55%

THD 59-62

conceding industry

funders lenders

FIDEPPP2

MIROVA SP2

Stakeholders

Example of projects in France… “Grand Est” DSP FttH concessive - Région Grand EST

Caisse des Dépôts Partner of SPV Losange

25/07/2017 : DSP signature

Contract length : 35 years

Start and completion of work : 2017 to 2022

Key milestones

Key figures

1,2M FttH lines in 5 years timeframe (concessif)

995 M€ investments (83% public, 17% private)

Caisse des Dépôts

77 M€ equity

10%

33%

25%

conceding industry

funders lenders

Stakeholders

22%

10%

Thoughts for food…

• Key to success is to bundle more profitable areas with less profitable

areas when offering concessions and associated subsidies.

• Best way to attract investment in fibre is to have a vision from Europe

through to national and local Govts –> the access network is essential

infrastructure

• Need for a political vision involving 3 layers where the passive layer is

provided by a regulated monopoly. The middle active layer can achieve

some competition, but should also deliver open access

Q&A

Thank you for your attention!

www.ftthcouncil.eu