There is a simmering change underway on the European telecom markets. Independent investors are increasingly involved in the roll-out of fibre-optic networks, while the incumbents stand by and watch. KPN recently confirmed to Telecompaper that it is considering offering services on such networks, which would make it a pioneer in this model in Europe. The long-running battle between networks and services appears to be increasingly tilted towards services. Incumbents are becoming marketing organisations, the same as their wholesale customers.
Rise of the infrastructure investor
There are plenty of examples of investors who see returns in fibre networks, not least in the Netherlands, such as Antin (Eurofiber), Arcus (E-Fiber) and EQT (CIF/CAIW/Delta). KKR is active in Germany (Deutsche Glasfaser), and in the UK, as are Antin (CityFibre) and Infracapital (Gigaclear, TalkTalk). Hyperoptic decided on GBP 250 million in debt to fund its expansion. Italy's Open Fiber has some of the biggest plans (19 million connections in 2027), for which it recently agreed EUR 3.5 billion in funding. In most of these cases, the funded networks are open (EQT is an exception), and the players have formed their own alliance of wholesale operators.
How are the incumbents responding? In Italy, TIM, which is working with FastWeb (Swisscom) in the Flash Fiber venture, appears to be angling for a merger of its network with Open Fiber. Incumbents in Ireland, Germany and the UK are competing directly with the infrastructure companies by rolling out their own FTTP. KPN has restricted its FTTH roll-out to new-build areas and said it's considering offering services over third-party fibre networks. So, cooperation rather than competition, avoiding overlap of fibre networks. TDC, owned by Macquarie, is taking the most radical route, with a voluntary structural separation so the network company can focus entirely on infrastructure.
KPN's path: an end to regulation
If KPN does go ahead and offer services on other FTTH networks, this is a step away from its own infrastructure. It's already gathered some experience with the acquisition of ISP Solcon. The ultimate result could be an outspoken choice for services over networks, leading to structural separation, a complete overhaul into a marketing organisation and an end to access regulation. If KPN were to reform itself from a network company with mandatory wholesale offer into a virtual operator and wholesale customer of infrastructure providers, the company could say goodbye to the current access regulation.
