Funding recognizes an innovative business model that starts with market needs
The resources are in addition to the agreement with Banco BPM and Natixis CIB that provided the company with €150 million in credit lines.
Rome, June 24, 2024 – FibreConnect S.p.A., an independent operator offering high-performance connectivity services for businesses in Italy’s Industrial and Artisan Areas (AIAs), has signed a €50 million financing agreement with the European Investment Bank (EIB).
The new line of credit is aimed at supporting the development of a fiber-to-the-home (FTTH) network in Italy connecting industrial and artisan areas to enable businesses to have access to ultra-high-capacity broadband line. Construction of the infrastructure began in 2023 and the project is scheduled for completion by 2027.
From the beginning of 2023 to the present, FibreConnect has made fiber available to more than 40,000 businesses located in 85 different Industrial and Artisan Areas spread throughout the country and activated the long-distance network backbone consisting of about 4,000 km of fiber connecting 20 PoPs and major national Internet Exchanges, equipped with ultra-high-capacity transmission systems.
EIB’s support is an acknowledgement of FibreConnect’s business model, which initiates partnerships with territory-based Internet Service Providers (ISPs) to develop the network, guaranteeing a revenue share. Partners are identified from market needs and, therefore, from business demand for services. In a context where the traditional infrastructure financing model-which leverages public incentives and regulatory schemes aimed at guaranteed returns-expresses profound criticalities, FibreConnect takes an innovative approach that ensures that the funds raised are invested in the network and that the company focuses on areas where market demand exists. “The EIB’s support testifies to the relevance of our project for Italy’s development and digital transition. The agreement signed is also extremely relevant from a financial point of view: our business model, in fact, is based on the activation of financial leverage with new debt only to support the realization of investments in fixed assets. An approach, therefore, unique for the infrastructure sector in Italy and Europe”- commented Giovanni Cialdino, CFO and Co-Founder of FibreConnect. The new technology infrastructure is a key element to facilitate the country’s digital transition by going to cover businesses, especially small and medium-sized ones, that are located in Artisan Industrial Areas (AIAs) not yet reached by the connection: in Italy there are more than 14,000 industrial, artisan and commercial agglomerations, characterized by a significantly lower density than population centers. Businesses located in AIAs will be able to take advantage of high-speed services-such as, for example, cloud access or advanced cybersecurity solutions-with symmetrical and, above all, guaranteed bandwidth, that is, not shared with other network users. This financing complements the capital raised by FibreConnect through institutional infrastructure investors two years after it began operations. In fact, the company had already signed, in June 2023, an agreement with a pool of banks composed of Natixis CIB – a leading bank with a global platform and strong presence in the Italian market – and Banco BPM – one of Italy’s leading banks – for a €150 million financing. The European Investment Bank
Since 1959, the EIB has financed some 2,700 projects in Italy worth more than €271 billion, supporting crucial infrastructure for the country’s development such as high-speed trains, renewable energy and digital transition networks, health, education and urban redevelopment projects. Recently, the EIB signed an agreement with Terna to finance the submarine Tyrrhenian Link between Sicily, Sardinia and the Italian Peninsula for energy security. In early 2024, the EIB also signed an agreement with Autostrade per l’Italia for a plan to modernize some 3,000 km of the transportation infrastructure network to increase its safety and resilience to extreme weather events. Finally, among the most relevant projects is the implementation of a cloud infrastructure – consisting of four interconnected Data Centers – for the Italian Public Administration under a public-private partnership.
Digital Transition in Italy
Although the PNRR has planned major investments (around €7 billion) for ultra-wideband and fiber-to-the-home (FTTH) network coverage for residential customers has reached 54 percent, according to an analysis by FibreConnect carried out on data from the Business Registry, in industrial and artisan areas it is less than 20 percent. Italy ranks 18th among EU countries according to the Digital Economy and Society Index 2022 (DESI), which summarizes relevant indicators on Europe’s digital performance and tracks the evolution of EU member states in digital competitiveness. Although between 2017 and 2022, Italy’s score increased from 28.2 to 49.3, recording the most significant progress in the EU, it still remains below the European average (52.3) and Spain (60.8), France (53.3) and Germany (52.9).
Tags: BEI, communicatisprint, EIB financing