Investment efforts to finance public-private and private-run networks are made in cooperation between private actors who own existing infrastructure, and public authorities.
Full FTTH coverage for Senden, Germany
Public funds
Public funds enable economic and social improvement and are available at local, regional and national government levels, as well as at EU level. The European Union is an increasingly important source of funding, providing mainly grants and loans, but even equity financing. As the volume and type of funding available have grown over the years, so has number of schemes.
The European Structural and Investment Funds (ESIF) include:
- The European Regional Development Fund (ERDF) that aims to strengthen economic and social cohesion in the EU by correcting imbalances between its regions. ERDF support to broadband deployment is primarily focusing on addressing market failures, targeting regions where investments are not taking place on a market basis alone.
- The European Agricultural Fund for Rural Development (EAFRD) that aims to support rural areas of the EU to meet the wide range of economic, environmental and social challenges. It may be used to support broadband projects in certain regions and Member States, depending on how the fund allocation has been designed.
- The European Social Fund (ESF) that supports jobs and employment opportunities for all EU citizens and can partly be used to support broadband rollout.
- The Cohesion Fund (CF) that aims to reduce economic and social disparities and to promote sustainable development.
A programme dedicated to connectivity is the Connecting Europe Facility (CEF), which supports broadband deployment via two financial instruments: Connecting Europe Broadband Fund (CEBF, equity) and the CEF debt instrument. The Connecting Europe Broadband Fund provides equity and quasi-equity to smaller-scale, higher-risk broadband projects, which do not have sufficient access to financing, in (under-served) suburban and rural areas. The CEBF is an equity fund of EUR 420 million, and the CEF Debt Instrument makes available approximately EUR 17 million in loans. The digital part of the Connecting Europe Facility (CEF Digital) will support and catalyse both public and private investments in digital connectivity infrastructures between 2021 and 2027.
The Recovery and Resilience Facility (RRF) is the key recovery instrument at the heart of Next Generation EU MFF which is meant to assist the EU in its recovery from the current crisis. The Facility will provide both loans and grants by frontloading financial support for the crucial first years of the recovery (a total of EUR 672.5 billion, distributed to MS in different measure; at least 20% earmarked for digital). The Member States should provide a detailed explanation of how the challenges identified in the country-specific recommendations, in particular the 2019 and 2020 semester cycles, are addressed by the proposed measures. They should also explain how the plans are consistent with the challenges identified in the most recent Council recommendation on the economic policy of the euro area for Member States whose currency is the euro. Check the RRF scorebord with thematic analysis on Connectivity topic.
The InvestEU Portal is the EU's online match-making portal enabling EU-based project promoters – public or private – to reach potential investors worldwide. InvestEU enables project promoters based in the EU to reach potential investors worldwide and to boost the visibility of their projects to a large network of international investors. Investors looking for investment opportunities in broadband infrastructure are offered a broad choice of viable projects.
Moreover, EU Member States have established national broadband strategies and policies, financial instruments and dedicated funds for investment in high capacity broadband projects.
Private capital and financial markets
Financial markets can be accessed for investment funds that provide equity or debt financing as well as hybrid solutions (mezzanine funding). Investment funds seeking a stable return on investment and may focus on safe, tangible assets such as high-capacity broadband infrastructure:
- banks, investment funds and private equity investors may be interested in providing early-stage financing, looking for a higher risk premium and an exit between 3 and 7 years once the business is established;
- infrastructure funds, pension funds and other institutional investors may invest in established infrastructure from the above after 3-7 years and seek long term investment at lower interest rates.
Other sources, such as venture capital, are usually not used for investing in infrastructure as they focus on short-term, higher risk opportunities and demand high interest rates with early exit options.
For further details and examples please refer to the Broadband Investment Handbook.
Latest news
Related Content
Big Picture
The Broadband planning section helps municipalities and other entities in their planning of successful broadband development projects.
See Also
Municipalities, municipal companies, joint ventures, and private companies can be involved in one, two or all three stages of broadband development.
The basic roles of Physical Infrastructure Provider (PIP), Network Provider (NP) and Service Provider (SP) can be taken by different actors.
Access to the broadband infrastructure is possible via different network nodes on the infrastructure and application level.
Key to successful regional broadband development is a politically-supported plan at local, regional or national level, that combines goals with specific needs and stakeholders.
The action plan details the costs, stakeholders, activities, coordination and monitoring involved in implementing the broadband strategy.
An overview of different wired, wireless and upcoming broadband technologies and a description of their advantages, disadvantages and sustainability.
Choosing the right business model depends on the roles of the market actors in the broadband value chain.
Investment models present interesting involvement opportunities for a public authority that engages in regional broadband development.
The main financing tools for high-speed broadband development projects are own resources, revenue-based financing, loans, equity and grants.
State aid for broadband may be necessary in some places where the market does not provide the necessary infrastructure investment.
A broadband network consists of geographical parts. The topology of a network describes how the different parts of a network are connected. The most relevant topologies for the backbone and area networks are tree topologies, ring topologies and meshed topologies. For the first...
In order to understand the roles that public administrations can take, it is useful to view the different layers that make up a broadband network as well as main business roles.
Broadband networks require different infrastructure types based on different logistic, economic or demographic conditions. Use the questions to help choose.
A comparison of broadband technologies presents features of each solution and helps decisions on the best solution for different regions.