We’ll win regional broadband wars with fibre ‘cash cow’, says Siro boss
Amid rural broadband chaos, Siro is quietly expanding its €450m fibre network, writes
Sean Atkinson appears to have no regrets on his company, Siro, leaving the topsy-turvy National Broadband Plan process.
Since its dramatic withdrawal last year, the €450m joint venture between Vodafone and the ESB has knuckled down to pursuing the reason why it was created in 2015: to roll out a private fibre broadband network to 450,000 homes and businesses in ‘regional’ towns.
“We wish the NBP, well,” Atkinson says slowly. “The NBP is something that has to happen for Ireland. I’m not going to comment on regrets.”
Siro spent north of €10m on its abandoned bid. But looking at how the State bid process is threatening to unravel, Atkinson’s calm demeanour is understandable.
Without any State broadband scheme to worry about, Siro will hit a milestone of 175,000 homes connectable to its new fibre service, which can offer speeds up to 1,000 megabits per second, much faster than any phone line.
These are almost all in large regional towns outside major cities and the 25,000 homes that have signed up so far have done so through retail partners such as Vodafone, Digiweb and Sky.
While this is a net addition for some broadband-starved parts of Ireland, the company is considerably behind schedule.
It had pledged to hit its 450,000 target by this year when it launched in 2015.
Why the delay?
“It’s very hard to build networks,” he says. “It’s infrastructure. It’s difficult. There were a lot of things that we ran into. A big storm can slow you up. That’s not an excuse, it’s just a fact. Something like this had not been done previously by ourselves or the ESB or the contractors.”
Was the public roadshow of 450,000 within three years too ambitious?
“No,” he says. “We’re really not too far away from where we wanted to be. Both shareholders remain committed to the Siro business plan.”
So when might that 450,000 target, spread across 50 medium-sized towns and satellite exurb areas, be hit?
“We’ll hit it within a couple of years, but it’s hard to say. We’re happy with where we are now. We have 175,000 premises now, rising to 225,000 by the end of the year. We have learned a lot and, with that experience, can say with a high degree of certainty what the numbers will be from now on.”
A financial return is a long term-bet, too.
Siro’s initial €450m capital estimate – divided equally between the ESB and Vodafone -has risen since the plan was first drawn up.
“It’s mostly labour costs,” he says. “It’s simply more expensive now to hire people to do the work than it was five years ago.”
Despite this, Atkinson says that the profits could be considerable.
“If you’ve built a robust network and a lean operation model and you have take-up, it becomes a cash cow,” he says. “Because the money’s spent up front, it’s a matter of when do you get a simple payback and what the return looks like. We’re very comfortable with the business plan today.”
Take-up, he says, is running at about 30pc.
“We’ll certainly be making money within 10 years,” he says. “The nature of a network is it’s capital-intensive up front.”
Siro’s initial mission was to focus on large regional towns such as Clonmel, Castlebar and Killarney: places with no proper broadband infrastructure but which have a big enough population to bet on a likely return in five to 10 years.
It was very clear on one point, however – it would not go into direct competition with Virgin’s cable broadband, which now dominates Dublin’s high-speed market, because it would be a much harder sell compared to pitching against Eir’s old telephone lines.
There are signs that Siro’s thinking on this point may be changing. “I’d say it’s evolving, yes,” Atkinson says. “We’re not targeting Dublin between the canals or anything like that. But we’re now working in over 40 towns, some of them being satellite towns of Dublin.”
Such satellite ‘towns’, include the suburbs of Swords, Finglas and Balbriggan, are now described by Siro as ‘underserved’.
“If you look at a place like Tyrellstown, we think this isn’t being served properly at the moment,” says Atkinson. “We see an opportunity there. Similarly with towns such as Naas, we’ve now seen an opportunity to go into adjacent areas like Clane.”
Even still, Siro isn’t about to radically upscale its ambition to tackle cities.
“We aspire to be a national player, but we haven’t made a decision to go in and tackle Dublin. We’re not afraid of building there, although it would cost a fortune and it would be a step change from what we’re doing now. What we are doing is seeing opportunities in the greater Dublin area and the commuter towns but we’re not planning on doing battle between the canals.”
If it doesn’t though, the company may find whatever opportunity there is to battle Virgin’s stranglehold slipping away. Eir is increasingly signalling an overhaul to its urban networks in Dublin and other cities from copper lines to something much closer to real fibre. If it does, it will resell those lines to fast-growing competitors such as Sky and possibly even Vodafone, locking Siro out of Ireland’s biggest broadband markets.
“That’s what Eir is saying but it’s not clear yet what they will do,” says Atkinson. “I haven’t actually seen a demonstration of any of that yet. They have a new owner in who’s talking that way but we’ll have to see.”
Sunday Indo Business