In an era when economic integration and interdependence is paramount, digital infrastructure investment has rarely been so critical to the economic future of Europe. As the volume of data required to be transported between cities, nations and continents continues to surge, having fortified network resilience, security, route diversity and quality to support those traffic flows becomes imperative. It calls for an unprecedented level of investment at this pivotal moment. Yet the approach to investing in new routes and upgrades has changed little since fibre was first laid.
Author: Samir Assaad, Senior Vice President of Strategy and M&A, EXA Infrastructure
The Trans Adriatic Express (TAE) joint venture between Trans Adriatic Pipeline (TAP) and EXA Infrastructure (EXA) showcases a new paradigm of partnering beyond the telecoms sector to drive investment in infrastructure on a level we have never seen until now.
Telecom infrastructure investment on this level, and with this degree of forward thinking, stands to bring substantial commercial gains and drive growth in local digital economies along key routes. In the case of TAE, what has been created is a highly reliable and differentiated system for EXA customers that unlocks additional value for both parties’ shareholders.
Over the past two weeks, we have delved into the engineering behind TAE - the long haul network that has been built in parallel with the TAP gas pipeline. As well as the implications for Europe’s digital infrastructure map, including security, resilience and connectivity opportunities.
In this final feature, we look at the commercial and strategic potential arising from this unique collaboration. For the telecoms industry, TAE represents a new model of partnership with a utilities provider. In this case, it capitalises on the opportunity to share an existing route in an otherwise underserved part of Europe, by seamlessly adding a fibre route alongside a gas pipeline.
There are many parallels in the aspirations of both parties, and as TAP had already invested in creating a near-900 kilometre gas pipeline to connect the Caspian Sea area with Italy, the decision to also route a fibre link along that length was obvious.
The TAE partnership is about far more than a shared route. It is about identifying and accelerating joint undertakings that enable both organisations to unlock greater value from their investments and commitments, so that together they can achieve more than they could on their own.
Partnering beyond telecoms
EXA’s partnership with TAP is a joint venture in the truest sense of the phrase. It is a symbiotic relationship, with capabilities and assets that are wholly complementary. EXA provides the telecoms equipment and operational expertise, and serves customers over it, while TAP provides and manages the gas pipeline infrastructure. TAP also enhances the security measures and associated services, and is at our side as a physical infrastructure partner when we seek to build out more fibre to interconnect more locations.
By aligning the interests of our partners as well as our clients, we created a truly unique partnership, and one that has never been contemplated on this scale in Europe. It has also created a potential model for collaborations with other gas pipeline owners and companies in other areas of the utilities sector. Creative thinking and strong business acumen are often the ingredients of economies of scale, but in this case we anticipate additional revenue streams as well.
EXA’s role has been about far more than just ‘plugging in’ assets. The partnership is a catalyst for creating an additive network effect. As more data traffic flows onto the TAE network, digital hub locations along the way experience a knock-on growth, which in turn create greater demand for the system.
This was always the intention of both TAP and EXA on going into the joint venture, and it is already beginning to show signs of incremental revenue growth.
What’s the model?
Fully aligned strategic and commercial interests, as well as strength of business acumen, is the underlying connective tissue in the joint venture. In creating TAE and taking it live, EXA has also shaped a partnership model that can potentially be applied to other shared investment projects elsewhere, where our customers would benefit from new network links and where mutual value can be unlocked rather than the network operator building all of the infrastructure from scratch.
Developing that model has been like piecing together a puzzle. No single factor drives the shared value that the partnership is creating, but in combination they produce the network effect that drives revenue growth and affirms the commitment of both parties to the venture.
No two scenarios are the same of course, but some of the fundamentals can doubtless be applied to other projects. Firstly, routing fibre optic cable alongside an existing asset that has been created for other purposes holds commercial merit and increases returns on invested capital. The presence of ducts alongside highways across Europe underpins this model. But doing so with other types of asset or system is often feasible, with a bit of innovative thinking.
Secondly, such partnerships could make investments in underserved areas more feasible given the partnerships with existing infrastructure providers, and may result in diverse commercial prospects as customer demand expands.
Thirdly, initialising and launching data services is an undertaking that can be carried out using pre-defined techniques common to the larger portfolio of EXA operated infrastructure. We have pre-defined our 'regeneration' stations in a ‘pre-design and fabricated’ format to minimise installation challenges in tougher-to-reach locations, and this is now paving the way for a new standard across the existing footprint also in terms of network upgrades.
This also reduces operational complexity and ensures uniform maintenance of the network. In the case of TAE, EXA installed In Line Amplifier (ILA) shelters at gas valve and compressor stations along the TAP pipeline, ensuring a highly secured and more robust and reliable network to our customer base.
Looking to the future
Ultimately, this allows both parties to not only provide services over compelling new routes to customers today but also to be highly responsive to future market demand.
TAE has already become a major and highly-prized new addition to Europe’s digital infrastructure map, and one that brings Europe and Asia closer together. Although it has been operational for a mere few months, TAE is already creating new growth opportunities as we witness its potential being realised into tangible commercial opportunities.
The potential success of the partnership is already clear, and we expect it to be a new model for infrastructure partnerships that can help to change the landscape of digital network investment.
