Page 11 - SAMENA Trends - September-October 2022

FEATURED SAMENA TRENDS

The State of Broadband Report 2022

Innovative Mechanisms and Instruments to Unlock Access to Capital to
Support Telecom Operators

The BBCom’s WG on 21st Century We are at a critical point in time, where immediate action is
Financing, Funding, and Investment
Models for Bridging Broadband required to eliminate the most pressing issues with regard to
Connectivity Gaps, chaired by the provision of meaningful universal access to connectivity.
SAMENA Council, has identified In this regard, SAMENA Council is exploring innovative
the need for fundamental paradigm
shifts that require, among others, to mechanisms and instruments to unlock access to capital to
broaden the base of contributors. support telecom operators.
One innovative way to move
forward with implementation of this This example of private partnership can 2. Making smarter investments and thus a
recommendation is to create new be designed to fulfil (i) financing needs for move away from “funding” (out of a moral
partnerships and bring together the initiatives and telecom projects that are imperative) to “financing”, which is more
telecom and the banking/financial aligned with the SDGs and aligned with the UN commercially grounded and relates to
services industries to create an Broadband Commission’s recommendations, making good investments, while contributing
innovative instrument such as a and with the private sector’s investment to socio-economic development; and
“Broadband Bond”. Such a Broadband needs; (ii) investor diversification goals within 3. Collaboration between governments,
Bond could be built on the general the telecoms and financial services industries; commercial banks, development finance
principle of bond-financing, whereby and (iii) common goals of sustainable, “green”, institutions (DFIs) and the private sector
an issuer may raise capital by selling and citizen-centric imperatives. In summary, to meet funding gaps is increasing,
a “low-interest debt instrument” the new instrument is built on the premises of: including through blended finance or the
to investors on the open market. 1. Using a combination of monetary and non- strategic use of development finance to
Because bond financing carries longer monetary, or in-kind, contributions, based on mobilize additional finance for sustainable
maturity and the risk lies primarily project needs and the various strengths of development in developing countries.
with the issuer (banks), such a risk collaborative financing;
profile offers an attractive investment
profile for telecom operators to carry
out infrastructure expansion (e.g. rural
areas), Capex debt re-financing or
procurement of additional spectrum.
The capital market, overall, provides
the ability to tap new investors
and offers structural advantages.
Partnerships with capital market
stakeholders, in turn, enable access
to a new class of investors around
the globe. In this context, the
Broadband Bond approach is befitting
recommendation No 1: Broadening the
base of contributors and can serve as
a major source of liquidity for ongoing
and future financing needs of various
industries, including telecoms.

11 SEPTEMBER-OCTOBER 2022