Scope Ratings says in a new research report that fibre is proving a riskier investment proposition than many investors have anticipated, judging from the performance of projects in Austria, Germany, France and Italy, despite high-level government support for the investment.

“The contrast between France, on the one hand, and Austria, Germany and Italy, on the other, illustrates the importance of the underlying project’s capital structure. Also important are the idiosyncrasies of the asset class, specific market characteristics – related to demographics among other factors – and the country-specific regulatory context, all crucial for understanding the risk profile of individual projects,” says Marisa Grier Fontenit, director in project finance ratings at Scope.

“They help explain why projects in France are generally meeting expectations unlike those in the other three countries,” Fontenit says.

Fibre coverage, penetration rates in selected European countries, 2023 (%)

Source: FTTH Council Europe: European FTTH/B Market Panorama 2024
Note: coverage rate measures geographic extent of network; penetration rate measures level of adoption among all households

Country differences show importance of capital structure, state support

“France has preferred to provide long-term standalone concessions and subsidies to project companies to roll out the network to less populated areas while also providing considerable regulatory support. Austria, Germany and to a lesser degree Italy have relied more on market competition, providing fewer subsidies and less regulatory support,” says Fontenit.

Fibre project companies, lenders and the authorities watch three parameters closely. First, there is the geographical extent of the fibre network, or coverage rate. Secondly, there is the level of adoption among all households, or penetration rate. Then there is the rate of subscription to the services once they are available, the take-up rate.

“Our study – a snapshot of current fibre roll-out in the four European countries -- shows that the different configuration of fibre projects is leading to very different outcomes in terms of coverage, adoption/penetration and take-up rates,” says Fontenit.

France’s network roll-out far ahead of projects in Austria, Germany and Italy

France has high coverage, penetration and take-up rates. According to the FTTH Council European Market Panorama 2024, fibre-to-the-home/business roll-out in France stood at 84%, well above the EU average of 65%, and considerably higher than Germany (40%), Austria (42%) and Italy (59%). Similarly, penetration rates, the proportion of households in the country with fibre, were also above average in France at 66%, ahead of Italy (16%), Germany (10%) and Austria (11%).

However, it is the customer take-up rate as the physical network is installed which is the key consideration for fibre projects. For most projects, it is only then that they generate revenue.

In France, 78% of households and businesses have taken up fibre once it is on offer compared with 27% in Italy, 25% in Germany and 25% in Austria, according to latest data from FTTH Council Europe.

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