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Interview with Amy Wettenhall, Macquarie Group

Amy Wettenhall is Senior Vice President at Macquarie Group. In this interview, Amy talks about the investment landscape and what the future may hold for sharing of different types of infrastructure.

CMS: Is this investment boom in the construction of new digital communications infrastructure sustainable? And to what extent can next-generation networks promote GDP growth, productivity and creation of new jobs?

AW: The long-term sustainability of these infrastructure initiatives depends on the business success of the various applications, realisation of balance sheet optimisation, unlocking of top-line revenue streams and/or improved operating efficiency.

It is sustainable, if all stakeholders embrace emerging new business models that support scale at pace. These new models underpin much of the future success of emerging technologies such as ORAN and realisation of 5G business benefits for enterprise. Alternative methods of funding are key to all of these.   

We see that telecom operators now realise that introducing private capital does not mean losing operational control of assets and infrastructure, but rather allocating capital more efficiently and speeding up deployment. In the enterprise space, those who adopt early will take significant market share and monetise next-generation technology, creating a sustainable vehicle for GDP growth as well as economic and social progress.

CMS: Which financing structures are emerging, and what do telcos, equity investors and debt providers need to know?   

AW: The change in recent years in the passive infrastructure space has been the growth in wholesale networks – for example fibrecos and towercos. These vehicles have improved the allocation of capital, reduced duplications, and created a barrier between network ownership and retail competition for network assets that can be easily segmented, shared, and ownership transferred.

The transformation of network functions and layers into the cloud, and the emergence of the enterprise player attracted by 5G’s low latency, high bandwidth and network slicing capabilities is driving new business models across the market. As examples of this, core networks increasingly will move into the cloud, and with this comes a pull for utilisation-based models, which may scale in an agile fashion in line with traffic growth.

In the enterprise space, the priority is to align costs to revenue or opex reduction realisation. Smart capital solutions provide a differentiator to legacy deployments of capital in all these scenarios. Telcos and TMT end-consumers should be well educated on alternative models available to them, in order to leverage first mover advantage in the market and take higher market share as deployment continues.

CMS: How can we facilitate the roll-out of fixed and mobile technology using different forms of infrastructure such as satellite and rail networks? Are these sharing models interesting to investors?

AW: Satellite is one to watch as the industry weighs potential geographic coverage benefits against possible latency challenges, since it takes longer to get a signal from space.

On land, there are many infrastructure installations that are still not being shared, but can be. These include urban and national rail, alternative transport, broadcast and other large private networks. For roll-outs to be successful (i.e. attractive to investment partners that will enable them), existing infrastructure owners must ensure that partnerships are attractive in terms of commercialisation and technical accessibility. Any network may provide an attractive opportunity for scaled and shared coverage, but unless there is an ability to wholesale it with ease, commercialise it at scale, and facilitate smooth operational access, such models may not succeed, despite their obvious possible benefits.

CMS: What are the advantages and disadvantages of different types of infrastructure investment, and to what extent is consolidation likely?

AW: In terms of passive networks in the RAN space, the benefits of sharing capital load and passive estates clearly outweigh the negatives because the infrastructure is isolated and uncoupled from other areas of the network. Fibre networks have the advantage of being a long-term investment - as opposed to wireless, which has a shorter technology cycles and concurrent need for new spectrum, lending it well to wholesale sharing and consolidation.

In the active space, consolidation will happen but strategies will vary, driven also by technology advancements in AI, cloud, low-energy infrastructure, network slicing and their opportunities for opex reduction. Practically, this type of sharing will carry additional operational considerations, because they will require internal business transformations and as such, their own opex implications.

All successful sharing models must be able to scale and interface.

Amy Wettenhal

Amy Wettenhall, Senior Vice President at Macquarie Group