December 2020 Fiber-optic technology is on the verge of a huge breakthrough in Germany. The coronavirus crisis has played no small part in pushing forward digitalization – and has gifted those who build and operate this ultra-fast network with an exceptional boom for years to come. The Hamburg Commercial Bank is both optimally networked within the industry and a sought-after financing partner.
From December 2 to 3, 2020 the world’s biggest industry gathering around the topic of optical fiber is due to take place: the FTTH Virtual Europe Conference. It will be the first virtual meeting, since, as a consequence of the coronavirus pandemic, the in-person event scheduled for spring at the Messe Berlin Expo Center had to be cancelled. This has done nothing to dampen the allure of the program: Notable operators such as Deutsche Glasfaser will meet industry giants including Nokia, Huawei, DKT and Commscope at the expo. This exclusive field is rounded off by globally active investors such as Macquarie, EQT, and CUBE, as well as banks who are leading the way in financing fiber-optic projects, including the European Investment Bank (EIB), ING, and the Hamburg Commercial Bank.
The Hamburg Commercial Bank has been a sought-after financial backer, advisor and opener of doors in the infrastructure investment segment for many decades. In light of the triumph of digitalization, the Hamburg Commercial Bank’s attention has been firmly fixed on the topic of optical fiber in the past few years.
As it stands, fast internet in Germany is more often a political aspiration than an economic reality. With fiber-optic amassing a modest 4.1% market share for internet provision, Germany is lagging behind on the global stage. There are only four OECD countries where the share of fiber-optic connections is lower than in Germany: Austria and the UK, among others.
However, this state of affairs is about to undergo a 180 degree transformation, according to Steffen Leiwesmeier. ‟The sizable backlog in demand represents a golden opportunity. We are at the beginning of a huge development in the expansion of the fiber-optic network in Germany and Europe. In just a short time, the data volumes generated by private end users have increased exponentially in a period defined by home working. The current offers from cable providers and VDSL telephone network operators will quickly be outstripped by demand. There is now only one option: Optical fiber with a minimum of 1 gigabit upload and download speeds” says Head of Financing Digital Infrastructure at the Hamburg Commercial Bank.
‟The coronavirus pandemic has opened many eyes. In one fell swoop, the advantages of digitalization have been made clear. At the same time, it has also become clear just how big the backlog is in many places. Just think about the blurred images during countless Zoom or Team conference calls”, said Leiwesmeier, who since spring of this year has acted as treasurer on the nine-member board of the FTTH Council Europe professional association, the organizers of the FTTH Virtual Europe Conference.
The Hamburg Commercial Bank has long been active on the FTTH market as a financial backer, building bridges between project organizers and investors and opening doors into the political sphere. It is clear then that attending the FTTH Conference was a matter of course for the Bank. High-caliber participants from the HCOB are appearing on four panels. Those participating include Dr. Nicolas Blanchard, Chief Clients and Products Officer Hamburg Commercial Bank, Inka Kinger, Global Head of Infrastructure, and Executive Director Thomas Miller.
In one panel organized by HCOB, the results of a survey conducted together with the University of Applied Science Bremen and YouGov will be presented. Survey respondents were asked about their willingness to pay for a private fiber-optic connection in their home. ‟First and foremost, the project financing we provide is targeted at collecting the fees of private end users. It is therefore important to know that private home owners are genuinely prepared to pay a fee. There is clearly a psychological barrier to starting to make payments here. In light of this, prior marketing activity is the be-all and end-all of fiber-optic expansion”, explains Leiwesmeier.
HCOB’s customers first and foremost include medium-sized builders and operators of fiber-optic networks, who are bringing fast internet to people and businesses far removed from the large and already well-supplied metropolitan areas. That is to say, those areas that make up the heart of Germany’s mid-sized and family-owned business.
For FTTH expert Leiwesmeier, 2020 could be a breakthrough year for optical fiber: Because data volumes during and after the first wave of coronavirus exponentially increased. Because half of Germany is logging into work from their home office. Because many of them will stay there even after the pandemic has subsided. Because people and companies are increasingly prepared to pay more for ultra-fast internet. And because ‟the market has matured” as Leiwesmeier puts it. ‟We are seeing an increase in large investors buying into smaller fiber-optic companies. This will do the market good, it will become better financed, more eager for investment and more professional. ”
With its deep industry know-how developed over many years, HCOB is often a sought-after financing partner. Alongside its own loans, the Bank often also provides access to funding from the program ‟Digital Infrastructure Investment Loans” run by the state development banks KfW.