Breaking into Europe’s Digital Infrastructure Markets: Drivers & Trends

Final blog in a three-part series – Fibre

As reviewed in our recent webinar, the digital world has become critical to daily life. Driving a digital transition requires investment in infrastructure – data centers, fiber networks and wireless communication towers that can support data growth and connectivity needs by improving network density, speeds and reliability.

Data centers serve a variety of functions and are essential for housing both edge and cloud workloads. Wireless communication towers are the last mile for all mobile devices and serve as the main connection hub for 5G, fixed wireless and edge computing. In this final blog of our Breaking into Europe’s Digital Infrastructure Markets series, we discuss the state of broadband in Europe.

• Broadband penetration in Western Europe has increased steadily over the past 10 years and is expected to reach almost 90% by 2030. As the market becomes more saturated and overall broadband penetration reaches 100%, broadband subscriber growth will naturally slow down. Still, broadband revenues continue to rise as consumers seek faster and more reliable internet.
• Fiber will drive revenues for telcos. For telcos, fixed service revenues are expected to be driven by growth in broadband revenues. Consumers have been increasingly inclined to take up higher speed broadband subscriptions, even for premium, with broadband subscriptions at or above 100 Mbps, up from 36% in 2018 to almost 50% in 2020.
• The region is dominated by three technologies: DSL, cable and fiber. Fiber is the only one with rising penetration and is expected to become the leading platform by 2026. While both cable and fiber are gigabit-capable technologies, many cable firms have sought to expand their networks with fiber and gradually move away from cable.
• Regulators have driven their operators to commit to ambitious fiber plans, which has led to new partnerships and investments in the market. In some countries, however, there's been a slow fiber rollout (including Germany, the U.K. and Italy), where incumbents have relied on DSL upgrades, focusing on fiber to the cabinet rather than fiber to the home (FTTH).
• In some markets, a lack of government regulation and funding incentives have deterred major operators from investing in FTTH and expanding the networks beyond major urban areas. The costs associated with these build-outs in remote regions remain high, and it can take longer to see a return.
• A lack of national- or operator-level goals in the U.K. have led to deficient coordination, causing the market to fall behind in terms of fiber rollout. This did result in the creation of over 100 smaller networks in the country, however, that are building their own fiber networks. There is still limited reach, however, as these networks overlap with each other and focus on urban areas.
• Many operators have found investors to help increase FTTH rollout, bringing timelines forward by three to five years. For example, Deutsche Telekom, which partnered with IFM Global Infrastructure in 2021, now aims to reach 12 million premises by 2028.
• An increasing number of operators are separating their infrastructure business from their retail business and creating new joint ventures. The cost of build-out for fiber has pushed more telcos to seek partners, often private equity and infrastructure specialists, which has brought a significant influx of funds to accelerate fiber goals and network build-out.

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Listen on demand to the full webinar titled Breaking into Europe’s Digital Infrastructure Markets: Drivers & Trends. 

Read the second blog HERE.