Tubes and ducts for fiber optics for high-speed telecommunications on a meadow

Long-term fibre investment in France: the Asterix project

    Long-term co-investing in the digital future: How FTTH project Asterix leads the way

    Asterix supports the build-out of fibre-to-the-home (FTTH) infrastructure in France and was originated by Bouygues Telecom and Vauban Infrastructure, who partnered up for this project. FTTH brings high-speed internet directly to the home – an increasingly vital infrastructure that connects lives and livelihoods to the digital map.

    France is a high-potential market for fibre investment, not least due to its regulatory framework, which encourages co-investment models in certain deployment areas. As one of the first long-term, large-volume, privately financed fibre projects in France, Asterix is based on a co-investment model that benefits all stakeholders. Though the factors that created Asterix may be unique to France, the project holds valuable insights for long-term investments in the fibre sector with mutual benefits for investment partners and telecoms players.

    KfW IPEX-Bank is providing long-term financing to Asterix as part of a lending group of experienced commercial banks and investors, leveraging its own previous success in the FTTH sector.

    Project specs at a glance

    The Asterix project is a partnership between Bouygues Telecom and Vauban Infrastructure Partners with the sole purpose of bringing fibre to France’s medium-density population areas.

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    Project scope

    EUR 1.4 billion over 5 years to create 2 million FTTH connections.

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    Support the build-out of FTTH in France and digital infrastructure in the EU.

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    Our role

    Long-term financing, commitment of EUR 104.5M.

    Asterix expands fibre access in a dynamic market with high-growth potential

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    France is a dynamic and promising FTTH market, with one of Europe’s largest broadband markets by subscribers, at approximately 30 million. While its fixed broadband levels are some of the highest in Europe ( >70 per cent), at a level of less than 25 per cent, fibre penetration throughout the country is still offering high growth potential.

    Expanding high-speed internet access is a vital need for all market stakeholders: For operators, it’s key to retaining and expanding their customer base, supplementing mobile telecommunications offerings and making 5G a reality. For consumers and businesses, it’s an increasingly crucial part of day-to-day life and work. Access to high-speed internet helps meet the burgeoning demand for digital products and services, for instance, high-quality streaming and gaming, video-conferencing and online classrooms for home users. Similarly, business applications such as off-premise solutions help to boost productivity for SMEs and larger enterprises alike.

    To serve the varied and growing needs of residents, operators and businesses, France’s ambitious Plan France Très Haut Débit (PFTHD) aims for full-fibre coverage by 2025. Increased access to ultra-fast internet is also in line with the high-priority digital targets of the European Union and member states, which views high-speed internet access through the lens of encompassing societal goals such as access to education and economic productivity.

    Long-term financing commitment to create two million new high-speed connections

    The foundation for project Asterix is a 30-year contract between the joint venture (code-named “Asterix”) and Bouygues Telecom. The initiators behind the project plan to invest a total of EUR 1.4 billion into the FTTH rollout over the next five years by acquiring long-term FTTH access rights (irrevocable rights of use or IRU). As a member of the lending group, KfW IPEX-Bank committed 104.5 million to finance the project through a bespoke long-term loan.

    Around two million FTTH connections are expected to be built within the next four years. Once access is available, Bouygues Telecom will rent long-term FTTH access rights in the Orange AMII area as a cornerstone tenant in the network, with a lease option for independent third-party operators interested in accessing the network as well..

    With its long-term financing of Asterix, KfW IPEX-Bank supports the build-out of FTTH in France and thus continues to boost the expansion of digital infrastructure in Europe.

    A golden rule for fibre investments in France: Know your zone

    To foster deployment and meet ambitious digital targets, the French regulator has created a complete set of rules for fibre infrastructure investments. France’s PFTHD divides the country into three zones: high-density areas (VDA), medium-density areas (AMII) and low-density, rural areas (AMEL and PIN). Asterix focuses on delivering high-speed internet access to medium-density areas (AMII).

    Across the country, France’s zone-specific regulatory strategies encourage equitable conditions for market participants and fair pricing for consumers. In high-density VDA zones, a lucrative market with ample competition allows for purely market-driven rollouts without the need for government intervention.

    In the more rural AMEL and PIN areas, the French government tends to support broadband funding and build-outs through concession-based structures and subsidy instruments. In medium-density AMII areas, the regulator encourages the co-financing of fibre deployment, an arrangement that diffuses pressure on incumbents and creates opportunity for other market players.

    Medium-density deployment zones: co-investment partnerships and early mover advantage

    For AMII areas in France, major telecommunications incumbents take the lead in building new fibre networks in their designated areas (e.g. Orange AMII). All the while, however, they are required to ensure fair and equal access to third-party players. This means other operators must be able to access the networks by acquiring IRUs or renting network sections once construction is completed.

    The principle of equitable access serves the needs and interests of both sides: When incumbents build large-scale networks, they face immense capital expenditures that consume scarce capital – potentially needed for other investments such as servicing and upgrading mobile telecommunications infrastructure and, increasingly, implementing 5G, which are necessary to maintain a competitive edge. By co-investing in the construction of new fibre networks, smaller alternative network providers (the “altnets”), on the other hand, can gain network access on an attractive, equitable footing. This allows them to serve local clients on competitive terms and benefit from early mover status in new areas of their choice.

    In line with the French tariff regulation for high-speed broadband and the IRU access framework, network access providers in France must adhere to strict, long-term pricing guidance for IRUs, laid out in a concave curve. This pricing structure encourages co-investment early on. Fibre co-investors enjoy more attractive terms of use than other players purchasing IRUs later down the line – a regulatory reward for sharing the designated incumbents’ risk during the network construction period.

    In this way, the French framework fosters long-term partnerships and creates a breeding ground for profitable long-term investments. Co-investing also accelerates the rollout of high-speed internet for faster access to a new customer base. For the millions of consumers and businesses waiting for enhanced connectivity, the result is a welcome upgrade.

    Long-term fibre partnerships as a model for a digital future

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    In European digital infrastructure financing, medium-tenor loans tend to be the standard. But in France, multiple factors foster the long-term partnerships and cost transparency which create fertile soil for long-tenor financing commitments. First, ambitious French broadband programmes have pushed to increase connectivity and bridge the rural-urban digital divide. Second, the regulator encourages and rewards collaboration. Depending on their status, telecoms providers benefit from shared risk or heightened opportunity. Third, a crystal-clear demand for fast internet ensures stable revenues, an attractive prospect for long-term investors.

    As services like e-health, e-gov, intelligent monitoring and elderly care join the ranks of telework and online schooling, there is a clear and growing need for equitable internet access. Boosting connectivity in all regions paves the way for a more inclusive and productive future – for residents, businesses and governments. Nevertheless, the sheer scope of fast-internet-for-all ambitions requires innovative, stable partnerships to enable and maintain secure access.

    Based on co-investment models such as those observed in recent projects in France, long-term partnerships benefit all stakeholders: Partner investors bank on stable returns, telecoms providers share the burden of FTTH builds and free up innovation capital to focus on an even brighter future for telecommunications.

    Looking ahead to Europe’s ambitious digital targets and digital as a strong pillar of economic and social resilience, mutually beneficial co-financing structures could present a promising model for similar infrastructure endeavours, especially with the backing and commitment of long-term partners.

    Portrait und Zitat von Jan Weismüller, KfW IPEX-Bank

    At a glance

    Our financing focus

    ✔ Mobile Operators

    ✔ Broadband & FTTx

    ✔ Data centres

    ✔ Towers

    ✔ Technology

    ✔ Satellites

    Our tailor-made financing solutions include

    ✔ Term loans

    ✔ Project financing, including PPPs

    ✔ Export Credit Agency (ECA) transactions

    ✔ Letters of credit (guarantees)

    ✔ Purchase of receivables

    ✔ KfW Broadband Programm

    Contact: Aida Welker, Global Head of Infrastructure

    KfW IPEX-Bank
    Palmengartenstraße 5-9
    60325 Frankfurt am Main

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