FTTH Business Guide - AWT.be

� slower deployment than expected
� lower subscriber penetration than expected
� CAPEX higher than anticipated
A further suggestion is that when the business case is relatively stable, you should
note down key metrics with every change that you make. Investors commonly ask
for an explanation of why one set of figures has changed. If you carefully note
down the impact of every change once the business plan becomes public, then
you can talk people through the steps that have created the differences in IRR,
NPV, peak funding requirement, and so on.
It is a good idea to pace deployment with available capital. Splitting the project
into phases avoids the need to raise all the capital at the start of the build-out.
Having identifiable targets at the end of each phase can help to reassure investors
that their money is being spent wisely.
Finally, remember that the success of a network – in the eyes of investors and
shareholders – will be measured by cash flow generated. To achieve optimum
cash flow the design of the network should be commercially not technically driven.
Arcadis NGN model
The FTTH Council Europe considered creating a generic business model for FTTH
networks, but discovered that several were already available, including at least
one in the public domain. This was put together by Dutch consultants Arcadis at
the request of the Ministry of Economic Affairs in the Netherlands.
Arcadis was asked to investigate the costs of connecting and operating the active
and passive network layers in an FTTH network. Two generic models were
produced, one for the business case and the other for operating costs, which are
available on the internet at http://ngn.arcadis.nl/ (in Dutch only). A report
describing the input parameters and calculations in the model was published at:
http://www.nederlandbreedbandland.nl/uploaded/FILES/rapport_aansluit_netwe
rkkosten_ez.pdf (also in Dutch).
The user can change any of the input values to the model including, for example,
the cost of equipment, the relationship between debt and equity, and how the
expected penetration rate will evolve. If certain costs are not known, the user can
choose to use a default value in the calculation, but bear in mind that these
generic values were worked out in 2005, and costs may have changed. The results
are presented in a number of charts delivered as an Excel file.
68 www.ftthcouncil.eu