Telecom Finance: the 5G revolution
Interview with Maxime Perrin and Robert Wallin, Telecom Industry Bankers, Natixis
Substantial deployment costs are prompting operators to mutualize their investments through specialized infrastructure vehicles.
The impending arrival of 5G has opened up new prospects in countless sectors – health, transport (including self-driving connected cars), smart cities and so on... 5G will break conventions, thanks to a capacity to transmit significantly larger volumes of data at greater speed than 3G or 4G, with significantly faster response time and ability to connect far more devices at the same time to the network.
All this, however, relies on new infrastructure. For everything to work as it should, networks will need to evolve. Whilst 4G requires an antenna around every 500 meters, 5G may need one every 60 meters, and it will be necessary to install a multitude of new small antennae in the heart of urban networks and in buildings. 5G requires new-generation smart antennae that can send a different signal to each device. Operators will also need to build more, smaller data centers closer to users (edge computing).
A new asset class for investors
"The arrival of 5G heralds a massive transformation for networks," explains Robert Wallin, Telecom Industry Banker at Natixis. "5G network deployment requires operators to launch substantial fundraising operations." It is a task that operators can be reluctant to carry out alone. The outsourcing and potential mutualization of networks is increasingly seen as a solution to limit costs, and the market is acting accordingly. "Several pure-players, infrastructure specialists, have burst onto the scene in recent years with financial partners that include pension funds and infrastructure funds," explains Maxime Perrin, Telecom Industry Banker at Natixis. "Our role is to bring all of these players closer together – investors, operators and infrastructure specialists – so that they can all fully benefit from the 5G opportunity."
These relatively new types of transactions have proven attractive to investors seeking to put money to work in new asset classes with attractive returns. "Investors interested in this new opportunity come from Asia, the United States and Europe," clarifies Maxime Perrin. "The broad range of investment propositions on offer allows every investor to find the right deal for them," clarifies Robert Wallin.
Few banks possess the necessary expertise
The new landscape in telecom finance requires specialist expertise. "The terms of the contracts are extremely detailed, complex and technical," highlights Maxime Perrin. "The telecom industry is undergoing a massive transformation, and there are only a few banks worldwide that have real expertise in this area. It is one of Natixis' strengths."