Why Public-Private Partnerships offer a bright future for global telecoms

By Gopi Sundaram Business No Comments on Why Public-Private Partnerships offer a bright future for global telecoms

By Gopi Sundaram, Principal at Granahan McCourt Capital

Q: What is your background?

A: I’ve been at Granahan McCourt Capital for ten years. I am an engineer by training and was previously with Citi Group focusing on M&A and capital markets activity for the TMT sector.

Q: Why has Granahan McCourt focused on public-private partnerships (PPPs) in telecoms infrastructure?

A: Four years ago it became very apparent to us that the growth in demand for broadband and related applications was not being met by the necessary developments in infrastructure to support them, both at the consumer and enterprise level.

You have to think about the growth of Skype and Netflix on the consumer side and of cloud computing, collaborative and remote working on the enterprise side. The convergence within the sector is also creating pressures, with for example, BT in the UK offering TV content to compete with Sky.

Q: But why the PPP model?

A: All around the world, governments want to improve infrastructure for their citizens, but cannot afford to do it on their own and lack the capital and expertise.  Equally, private sector organisations may deem certain projects to be uneconomically viable.  This is often the case when it comes to building new infrastructure and delivering enhanced services to rural communities. But often these areas are the ones with the greatest need.

All around the world, governments are recognising that to connect the unconnected and do right by their citizens, PPPs offer the most suitable model.

There are many factors which make for a successful PPP.  But one of the key aspects I look for is finding the right partner with the right, relevant experience and proven track record.  We are increasingly seeing companies trying to diversify in PPP tenders, such as when rail or electricity supply companies venture into telecoms services – but the sensible selections are for partners to focus on their core skillsets.

Q: What does GMC bring?

A: Our unique proposition is that we can be the guy in the middle and understand the challenges of all involved. We bring private capital to government, helping to build infrastructure. We can assume responsibility for a carrier’s assets and upgrade them, allowing them to focus on customers while we take care of underlying infrastructure.

Q: GMC has been in a successful partnership with the government in Ireland to provide telecoms infrastructure. Can that Irish PPP model be replicated elsewhere?

A: Certainly. We came into Ireland with the idea of proving a concept. We have done that successfully and the aim was to transfer that into Europe.

In Europe we see the same drivers, as governments want to bring the benefits of advanced telecoms to their entire populations, sometimes using major utility or infrastructure companies whether state-run or otherwise.

In Africa and the developing world, governments want to leapfrog into e-commerce using external capital and expertise but without being dominated by one provider.

Q: What is the GMC approach?

A: We have invested in fibre, microwave and satellite and so we look at infrastructure deployment and come up with the most economical solution to address the problem. The PPP approach works really well for underserved rural areas – but we can make it work equally well in deprived urban environments through our low-cost deployment techniques.

Q: What would you say to a government contemplating a PPP approach to telecoms infrastructure?

A: Investing in PPP broadband gives you growth. No question. But lots of governments are facing globalisation with skilled or semi-skilled labour that is underemployed. If you invest in infrastructure you have the immediate benefit of increasing employment and wages as well as enhancing long-term economic growth.

PPP facilitated-infrastructure projects are a major counter to the social and economic problems many countries face.

Q: What makes for success in a public-private partnership?

A: The ability to partner effectively, the willingness to be transparent and long-term commitment on both sides. Returns will take care of themselves in relation to the market.

Q: How do you see PPPs developing?

A: In most of the world they are still in their infancy, but they will be adapted for delivery of telecoms infrastructure around the globe as everyone recognises that connectivity is close to being a universal service obligation.

Personally, I’m an infrastructure bull, because even in America there has been underinvestment which will have to be addressed for long-term economic growth.  There are also significant pools of cash looking for safe returns, be that family trusts or pension funds. The future of PPPs for telecoms delivery is very bright indeed.

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