Analysys Mason provides due diligence for €1 billion fibre deal

08 April 2020 4 min. read

Telecoms infrastructure firm Cellnex has launched a new joint venture with French communications operator Bouygues Telecom. The venture, which will help the roll-out of 5G across France, was supported by a number of consultants, which performed due diligence work on the transaction and parties.

Full-fibre broadband connections can deliver much faster speeds than copper – up to one gigabit per second. They are also up to five times more reliable, and less likely to slow down when lots of people use them at the same time. Full-fibre deployment is not without its challenges, however, particularly with regards to investment.

According to Mark Harrop and Simon Rawlinson of Arcadis, writing for at the end of 2019, “Most of the capital costs are sunk in a network that cannot be repurposed and are incurred ahead of sales. Demand risk is a particular problem as it is unclear when customers will switch to fibre and how much they will be willing to pay. As a result, the payback period on investment is 15 to 20 years, highlighting the importance of a cost-effective roll-out and the risks of over-building by competing networks.”Analysys Mason provides due diligence for €1 billion fibre dealThe chief concern for many European telecoms providers is therefore how risks associated with full-fibre may prevent investment in such networks. This may be about to change, however, with the news that telecoms infrastructure giant Cellnex has forged an alliance with French operator Bouygues Telecom to launch a new joint venture, which will eventually roll out a nationwide full-fibre network across France.

The network will connect Bouygues’ cell sites and edge facilities, with the ultimate objective being to accelerate the company’s Bouygues' deployment of high-speed fixed broadband and mobile – and in particular 5G – connectivity throughout the country. The companies expect to spend €1 billion on the joint venture over the next seven years, pushing out 31,500 kilometres of fibre in that time. Once the fibre network and the metropolitan offices supporting it are fully deployed, the EBITDA generated by the new company is expected to stand at €80 million.

Cellnex CEO, Tobias Martinez, said of the news, "The agreement to roll out a genuine fibre ring in France interconnecting various key elements for the fixed and mobile ecosystem ranging from the towers connected to the fibre, the data processing centres distributed in the network, to small cells, represents our commitment to a holistic cooperation model with our key customers to facilitate planning and efficient operation of the telecoms infrastructures networks."

Bouygues Telecom will own 49% of the newly-incorporated company, while Cellnex will hold 51%, along with 100% of the economic rights.

The deal was supported by a number of consultants. Representing Bouygues Telecom, global telecoms and media consultancy Analysys Mason provided vendor commercial and technical due diligence of the carve-out of current and future assets. The consultancy advising Cellnex was at the time of writing unknown.

A statement from Analysys Mason said the firm "is pleased to have supported Bouygues Telecom in the creation of a nationwide fibre backhaul and edge data centre provider in France.”

Over the last two decades in particular, Analysys Mason's consulting and analyst teams have played an influential role in helping clients adapt to business in the internet and digital eras. This recently saw the firm work with the Scottish Government to estimate the total success of Digital Scotland Superfast Broadband campaign, and support a new scheme with the Irish Government to upgrade the nation’s internet connections, which is set to see more than 1 million people across Ireland given access to super-fast broadband by the end of 2020.