Transform Digital Conference 08-05-2014 broadband, technology, fibre, digital

1. Henri Piganeau
Cube
Infrastructure
Fund
NGN Funding
Attracting Infrastructure Funds dry powder
May 2014
Transform Digital INCA Conference

2. 2
Cube Infrastructure Fund – snapshot
1)
Source: Preqin, September 2013
2)
Source: Ventura, March 2012
13 investments across 3 industrial platforms and a diversified
portfolio of power generation assets
Communication
Infrastructure
Fiber Optics, Local Loops,
Telecom Submarine Cable
Public
Transport
Ferries & Bus,
Railways & Bus
Power
Generation
Cogeneration & Biomass,
Waste to Energy,
Photovoltaic, hydro and
Wind energy
D EVEL O PME N T
Energy
Supply
District Heating,
Energy Services
2 leading public
transport operators in
Sweden and Finland
subject to transaction closing
2019 to 2022Term
Natixis Environnement & Infrastructures
Luxembourg; Team of 24 professionals with
proven industrial, managerial and cross-border
investment experience
Manager
Focus
Regulated brownfield infrastructure in the E.U.
Sectors : transport, energy, environment and
communication infrastructure
Long term predictable cash flows offering solid
growth potential, preferably in the middle-market
60% of cash flows in Euros
Currently 13 investments completed and
3 investment platforms created
Investments
Current commitments at €1.2 billion
23 investors: 2/3 France – Europe, 1/3 North
America
Fund
Size
Cube Infrastructure Fund Cube’s portfolio

3. Communication Infrastructure Platform
Current and prospective geographic presence
Local Networks
Backbone
New tenders 2013 – 2014
Consolidation targets
BalaLink
OranLink
EulaLink
Revenues: € 54m
Employees: 150
10,000 km of fiber network
Key Figures
(consolidated)Key investment considerations
•Long term contracts with local authorities and high
barrier at entry to build and operate networks in semi-dense areas
•Strong growth potential driven by the need for superfast symetric
broadband from both enterprises and general public
Outlook
•Capitalize on its unlevered structure and on the significant pipeline of
tenders coming to the market, to increase further its long-term growth
prospects and diversify its contract base
•Pursue opportunistic acquisitions and partnerships
Key investment considerations
•Strong cash flows backed by long-term contracts with
major telecom providers in a fast growing market
•Value creation through profitable development: CanaLink (2011),
OranLink (2011)
Outlook
•Stay alert to the current trends towards consolidation in the European
telecom landscape
•Pursue additional development opportunities : OrVal cable between
Oran and Valencia, EulaLink to connect Latin America to the Iberian
Peninsula
3
Cube’s investments in communication infrastructure

4. 4
Infrastructure Funds in Europe - general overview
Typology
 Specialized Private Equity Funds that concentrate on financing infrastructure
companies
Despite its qualities (anti-cyclical nature, etc.), communication infrastructure might
not always be perceived as infrastructure to infrastructure investors…
Despite its qualities (anti-cyclical nature, etc.), communication infrastructure might
not always be perceived as infrastructure to infrastructure investors…
Available funds
An untapped
potential for
Telco
 Dry powder has been
largely growing from
2003 on
 Current dry powder in
EU: ca. € 25 billion1)
 Telco sector attracted only 6% of investment in infrastructure in 2005-112)
0%
5%
10%
15%
20%
25%
30%
35%
Oil & Gas Transport Power Renewable
Energy
Mining Social &
Defense
Telecom Waste &
Water
1)
Source: Preqin, September 2013
2)
Source: Ventura, March 2012
1.7
6 7.9
15.9
22.6
19.7 17.9
20.7
31.7
24.1
31.8
0
5
10
15
20
25
30
35
déc.-03 déc.-04 déc.-05 déc.-06 déc.-07 déc.-08 déc.-09 déc.-10 déc.-11 déc.-12 sept.-13
Dry powder Europe
$ bn

5. 5
Where has their money gone to date?
Examples
Set of common characteristics
 Open Access Networks, i.e. underlying
infrastructure is separated from services
procurement
 Mostly, enjoying a monopolistic or
duopolistic position
 With a developed asset base
 And for some, existing revenues
(including cable that would migrate to FttH)
Infrastructure funds strive to limit the commercial risk when investing in NGN assetsInfrastructure funds strive to limit the commercial risk when investing in NGN assets
Fund Investment Date
200x
2008
2009
2011
2011
2011
2012
2013
2013
RIP

6. 6
Attracting Infrastructure Funds: Addressing the risks
Technological
risk
Several risks are associated to Communication Infrastructure projects; main one is the commercial risk
Commercial
risk
Distribution
Regulatory
risk
 [1] Open Access Networks with a
monopolistic position
 [2] Commitment from RSPs to use
the network
 [3] Long term contracts with RSPs
or local authorities
 [4] Availability payments or
guarantee from local authorities
 [5] Extinction of copper (copper
removed once roll out is completed)
 [6] Migration from copper
(ownership of both copper and fiber network
– extinction of copper afterwards)
[1]
[1]
[4][3]
MitigantRisk Cartography
Construction
risk
Financing risk
Market
adoption
Network
competition
Regulatory
risk
Network
competition
Network
competition
Distribution
Market
adoption
Technological
risk
Financing risk
Commercial
risk
Commercial
risk
Financing risk
Commercial
risk
Financing risk
Commercial
risk
Financing riskFinancing risk
Network
competition
Distribution
Market
adoption [6]
[6]
[6]
[6][5]
[5]
[5]
[5]
[5]
[2]

7. 6
Attracting Infrastructure Funds: Addressing the risks
Technological
risk
Several risks are associated to Communication Infrastructure projects; main one is the commercial risk
Commercial
risk
Distribution
Regulatory
risk
 [1] Open Access Networks with a
monopolistic position
 [2] Commitment from RSPs to use
the network
 [3] Long term contracts with RSPs
or local authorities
 [4] Availability payments or
guarantee from local authorities
 [5] Extinction of copper (copper
removed once roll out is completed)
 [6] Migration from copper
(ownership of both copper and fiber network
– extinction of copper afterwards)
[1]
[1]
[4][3]
MitigantRisk Cartography
Construction
risk
Financing risk
Market
adoption
Network
competition
Regulatory
risk
Network
competition
Network
competition
Distribution
Market
adoption
Technological
risk
Financing risk
Commercial
risk
Commercial
risk
Financing risk
Commercial
risk
Financing risk
Commercial
risk
Financing riskFinancing risk
Network
competition
Distribution
Market
adoption [6]
[6]
[6]
[6][5]
[5]
[5]
[5]
[5]
[2]