Dutch FTTH Effort Finding Banks Unwilling

March 24th, 2009 by · Leave a Comment

According to Rudolf van der Berg over on Internet Thought, the FTTH effort in the Netherlands has run into a little snag.  What snag? Oh just that little thing called money.  The buildout is supposed to cost some $4B, however the partners KPN (NYSE:KPN, news) and Reggefiber were supposed to contribute only 25% each.  The rest was to come from the banks, and of course we know that banks all over the world have amazingly re-learned the word 'no' (or in this case perhaps  'nee') with a vengeance. 

I haven't said much about the FTTH effort in the Netherlands, mainly because I haven't followed it that closely and don't really understand the Dutch regulatory environment.  But I have to wonder though just how big a surprise this could possibly be.  Raising $2B right now is only possible for those who don't actually need it, such as Cisco Systems (NASDAQ:CSCO, news, filings).  Oh, and of course those lucky enough to actually be banks with no money who are deemed too big to fail.

So what now?  "Local governments and pension funds"?  I don't know how it is in the Netherlands, but here in the US state and local governments are facing huge revenue shortfalls.  And pension funds, at least the non-pyramid-scheme ones, well those aren't exactly investing in new construction either.  I will be amazed if they can find much gold in those pockets.

If anyone asks me (and they won't), I would suggest the clwr route:  make the buildout a moving target.  Fiber doesn't need to be everywhere to be valuable, if you can only get $2B plus small tranches periodically, then build what you can with that and prove its value by the cashflows generated.  The situation has drastically changed, so must the plans.

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Categories: Fiber optic cable · ILECs, PTTs

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