1. Investing With Communities
DGCNECT Round Table Meeting
6th November 2014 Brussels
David Cullen, Director ITS Technology Group
2. Who Are ITS Technology Group?
Background
Privately owned
company with a
heritage spanning
17 years
Coverage
Activities spread
across 2 countries
with 7 offices
ITS Technology Group Limited
City Serve
Limited
ITS
Hammersmith &
Fulham Limited
ITS Telecoms
Solutions Limited
ITS Canada
Inc
Our Footprint Delivering Value and Customer Excellence
Glasgow
Redcar
Manchester
London
HQ Runcorn
Nottingham
ITS Canada Inc
Canadian Entity
Focused on FTTH
Includes Group acquisition of Networks by Wireless (Sept)
3. ITS Technology Group Service Offerings
Networks
Telecoms
IT
Managed
Services
• Audit, Design, Consultancy,
Build & Operate
• Maintenance & Support
• Fixed / Wireless LAN / WAN
Fibre Optical
Licenced / Un-licenced
Ethernet
Guest Wi-Fi
• Rural and Urban
• Public / Guest Wi-Fi
• P2P and P2MP
• Addresses Digital Inclusion
• Wholesale Telco Access
• CCTV (Fixed and Wireless)
• Security Monitoring
• Audit & IT Health Checks
• IT Service Desk
Desktop, Server,
WAN/LAN Support
• Enterprise Cloud Solutions;
Hosted Exchange
Office 365
Share Point
Dynamics CRM
Lync
• Hardware Config & Delivery
• Data Backup & Recovery
• Enterprise grade Security
• Partner Delivery
• Systems Integration
• Unified Comms
• VoIP & Hosted Telephony
• Non Geographic Numbers and Calls
• ADSL/SDSL/Fibre/EFM/Leased Lines
• Line Rentals & Call Saving Packages
• Mobile Office Solutions & Lync
• Mobile Communications across all Networks
4. Why Choose ITS Technology Group?
One vendor, one point of contact
which mitigates operational &
commercial risk
Variety of models, we can prime, sub
contract, design, build, consult or
just support
Rapid deployment with our in house
design , delivery & support team
We design, build & support your
complete ICT estate
Project based finance – up to 100%
of the project costs available
One
Solution
Impressive
Client List
Funding
Models
Agility &
Creativity
Engagement
Models
Network
& IT
Estate
Our client list is impressive & our
partners list is solid which all testifies
to our credibility & customer
excellence mantra
.
.
.
.
Design Build Finance and Operate (DBFO)
Open Access Fibre and Wireless Networks
in partnership with local authorities and communities
5. We look to establish ‘Bridgeheads’ in municipalities or communities
where we can demonstrate an affordable and sustainable business case-and
the capability to expand.
Three Key Criteria that indicate a sustainable bridgehead:
Active Engagement
• A community or local
authority actively involved
and passionate about
creating social and
economic benefit from
broadband
• Clearly defined and
respected Champion(s)
leading the initiative
(Re-)use of Assets
• Available infrastructure
(e.g. ducts, land, buildings,
power) to reduce the
capital cost of civil
construction
• Available funds as
investment where assets
are needed
• Available resources to
reduce labour costs
Demonstrable Anchor
Tenancy
• Community commitment to
take service (contracts/
shareholding, subscriptions)
• Adoption by local services
(school, GP surgery etc)
• Transit links for mobile
operators etc
What do we look for?
6. Typical Commercial Models
We engage with the municipality or community using an Asset Co/ OpCo
approach either directly or through a Concession Agreement for use of
their assets:
Direct Asset Co:
• FibreGarDen rural FTTP
scheme in Cumbria
• Digital Teesdale: rural
wireless scheme in Teesside
• CityServe: wireless scheme
serving socail housing,
business parks etc in
deprived areas of East
Manchester
Concession Approach:
• London Borough of
Hammersmith & Fulham
• 17km of CCTV duct
expanding to >40km
• 10 year concession to
develop NGA
• Separate entity for joint
exploitation/ investment
• 4 other authorities in
London and other regions
looking to adopt the mode
Other Public/ Private
Partnerships:
• South Wales Fire & Rescue:
wireless scheme using
network for fire stations to
provide ‘NGA hubs’
• Oldham: NHS network
linking hospiitals and
medical centres, expanding
to provide NGA
7. The AssetCo/ OpCo Relationship: Funding and Capital Flows
Implementation of infrastructure in line with the requirements and objectives of
the Investors- by Investors
ITS Technology Group and Partners:
roles in implementation and operation
ITS
OpCo:
Project
Mgr
and
Service
Integrator
Infrastructure
construction
Active
equipment
provider
Implement
Support
Systems
Income from ITS to
partners for plant,
equipment and
implementation
support
Investment from:
• Local Municipality (as funds and assets)
• Other public sector partners
• ITS (services and funds)
• Risk Capital Funds ( at early stage)
• Infrastructure Funds ( at maturity)
Capital costs for network
build and rollout
Joint Venture
AssetCo:
Joint investment and
ownership
Capital receipts
8. A flexible commercial model to allow maximum opportunity for anchor tenancy capture
Monthly service income from JV
to ITS for:
•Customer Svce Desk
•Configuration mgt
•Maintenance support
Active
equipment
maintenance
Wholesale network charges for
services provided over infrastructure
‘Asset charge’ for use by other
service providers
Infrastructure
maintenance
Support
Systems
ITS
OpCo:
Project
Mgr
and
Service
Integrator
Joint Venture
AssetCo:
Joint investment and
ownership
Public sector retail charges
direct to AssetCo operating as a
Public Sector ISP/ aggregator
Public Sector
Income from ITS
to partners for
support and
maintenance
services
Monthly income from business and residential users
of services provided over infrastructure
Dividend
Returns to
Investors
The AssetCo/ OpCo Revenue Flows
Internet Service Providers
inc. ITS Managed Services
9. Hammersmith & Fulham
A Concession Contract to Commercialise the duct assets in
London’s largest Borough to provide high-speed fibre networks
The Challenge
London Borough of
Hammersmith & Fulhamhave
CCTV and Traffic Control
networks that use Council-owned
ducts.
H&F wanted to commercialise
these to assist in bringing next
generation access to businesses
and citizens
The Solution
ITS Technology Group secured
a 10 year exclusive concession
agreement with H&F, to use
the existing and all future ducts
for deployment of a Fibre to
the Premise (FTTP) solution
and operation of a wholesale
ultrafast broadband network
The Results
• £11m projected revenue to
H&F (£2m guaranteed)
• Citizens and businesses have
access to high quality,
affordable NGA
• Open Access network
attractive to ISPs and other
network operators
• Leading model now being
adopted by other authorities
“LBHF are proud to be part of such a ground breaking and innovative working relationship with ITS. Digital transformation
is a key driver within our borough supporting residents and encouraging businesses alike.
ITS and LBHF are culturally aligned in both our working style and ambitions for digital and we look forward to a successful
working relationship.”
Sharon Bayliss, Director for Customer and Business Development, Hammersmith and FulhamCouncil
11. FibreGarDen
Intended network hub (PoP)
540 premises connected over a 71km FTTP network
Rollout from October 2014 to November 2015
12. Pricing
BT
Equivalent
Infinity 1 Infinity 2
Download
Speed
Up to
38Mb/s
Up to
76Mb/s
Upload
Speed
Up to
9.5Mb/s
Up to
19Mb/s
Usage Limit 20 GB Unlimited
Contention 20:1? 20:1?
Monthly Line
Rental
£17 £17
Monthly
Service Cost
£15 £26
Total
Monthly Cost
Inc VAT
£32 £43
Fibre
GarDen
Basic Enhanced
Download
Speed
30Mb/s 100Mb/s
Upload
Speed
30Mb/s 100Mb/s
Usage Limit 40 GB Unlimited
Contention <20:1 <20:1
Monthly
Network
Rental
£25 £42
Monthly
Service Cost
£0 £0
Total
Monthly
Cost Inc VAT
£30 £50
13. FibreGarDen Funding Mix and Value
Total Build and working capital: c.£1m
Fibre GarDen Funding Ra os
38%
15%
3% 15%
3%
7%
19%
DEFRA Grant (deferred payment)
Share Equity from Communi es
YDNP Grant (deferred payment)
SIB Grant
SIB Loan
ITS Group Support
Community Assistance
Typical Market Value of built and operating network: c.£3m
15. Atlantis Hydrotec Domestic ‘D Series’
Up to 500m
Per run
A Tested and Certified
end-to-end solution………
• Requires only a small pit at each
end to access the water supply
pipe
• ISP simply removes end-stop at
boundary, connects to micro-duct
tail and installs blown-fibre
through to the demarcation box at
the premises
• Premises demarcation box
includes a gas-block device
• Easy install regardless of driveway
construction, type or length
• Typical one to two hour install for
any length of run
• Certified installer training
16. Atlantis Hydrotec Transmission ‘T Series’
MDUs and
Business/R
etail Parks
Valve by-pass & fibre break-out locations
PTP
Microwave and
Satellite Links
Mobile
Phone
Cells/Masts
Rural
Communities –
Broadband and
ISP services
17. Investment Requirements
The AssetCo structure provides an ‘easy to understand’ vehicle for other investors/ investments
Project Based Capital/ Social Investment
• Short term risk capital to assist in ‘kick starting’ the business model
• Clear objectives of the AssetCo
• Identifiable returns/ increase in value
• Identifiable social objectives owned by the AssetCo shareholders
• Short- term exit ( 1 to 5 years)
‘Patient’ Infrastructure Funding
• Long term capital for secure, stable business activities
• Transfer/ purchase from project funders above
• ‘Guaranteed’ returns on low risk, long term investment
• Long term exit/ annuity value (10 to 25 years)
“We had to overcome several obstacles during the
establishment of our new network infrastructure
and ITS have delivered these with no downtime or
loss of email connectivity which was key to us at
the time. We would highly recommend ITS”.
Oliver Lightowlers, Chief Financial Officer
Loans or Grants
• AssetCo model allows for debt and equity financing
• Loans work better but Grants can be incorporated as long as associated outputs can be
owned by the AssetCo shareholders
The more capital offered into AssetCo’s = the more alternative networks ITS can undertake simultaneously.
18. Thank You
Email:
info@itstechnologygroup.com
Thank You
ITS’ Offices:
Visit:
www.itstechnologygroup.com
Tel:
0844 856 9966
Head Office: The Heath Business & Technical Park, Runcorn, Cheshire WA7 4QX
London Office: 2 Bloomsbury Street, London, WC1B 3ST
North East Office: The Wilton Centre, Wilton, Redcar, Cleveland, TS10 4RF
Scotland Office: Standard Buildings, 82 Gordon Street, 94/102 Hope Street, Glasgow, G2 6PH
Midlands Office: Heritage House, Soloman Road, Cossall Industrial Estate, Ilkeston, Derbyshire, DE7 5UD
Canada Office: 12966 Carluke Cres, Surrey, British Columbia, V3V 6R4, Canada