Tuesday 20 February 2018

Enet owner on the road to nowhere as fibre rollout race in regions picks up speed

Telecoms entrepreneur David McCourt tells Adrian Weckler that Enet's new €100m plan to bring broadband to 115,000 homes may just be the start

Granahan McCourt founder and CEO David McCourt hopes to expand its initial broadband rollout. Photo: Adrian Weckler
Granahan McCourt founder and CEO David McCourt hopes to expand its initial broadband rollout. Photo: Adrian Weckler

Over the last two years, Ireland's non-urban broadband rollout has gone from a deserted terrace to a targeted arms race.

Roscommon Town is in the middle of nowhere. Yet it will soon have three entirely separate fibre broadband networks - Eir, Siro and Enet - competing for the broadband custom of local homeowners and businesses.

Other relatively isolated places such as Donegal Town or Manorhamilton are also set to have at least two different fibre broadband providers over the coming 12 months.

While some of this is down to Eir finally getting its broadband act together, much is happening because of relatively new entrants seeking to take an initiative.

Enet is one of these entities. Although the company has been around for several years, managing state-owned 'metropolitan networks' around the country, it has recently upped its ante.

Earlier this month, it announced a joint venture with the energy company SSE to connect 115,000 homes and businesses in regional towns to 1,000Mbps fibre broadband.

As well as Roscommon Town, Donegal Town and Ballinasloe, it will start with other regional enclaves such as Bundoran, Ballyshannon and Ballybofey. The rollout will cost them €100m.

"In a small country like Ireland, spending €100m building a network is actually a big deal, I would think," says Boston entrepreneur David McCourt, founder and CEO of Granahan McCourt, which owns Enet.

It is a big deal, especially if it can be done from scratch in the two-year time frame that Enet has set for itself. So can it?

As a slower-than-promised rollout from Siro shows, laying broadband infrastructure is hard in Ireland. It had promised 500,000 homes connected by 2019, but won't get anywhere near that target.

McCourt has no doubts about the difference between Enet and Siro.

"Siro weren't a network company, they were a wireless company and a power company going into a different business," he says. "It's a little bit more difficult for them than it would be for us."

As for Eir, McCourt says that it has a "different motivation" than challengers such as Enet.

"They're the incumbent so they've a different motivation as to why they'd want to build something slow or fast. They already have the customer. So what's the incentive to build it fast?

"They're replacing old customers and copper with new customers and fibre, they have a different incentive. We don't have customers in those areas. Our incentive is to build it as fast as we can."

Where will the 700 contractors to be hired come from?

"Hopefully they'll come from Ireland," says McCourt.

McCourt likes to think big. It's a trait of family and friends. His brother Frank is a former owner of the LA Dodgers baseball team and current owner of Marseille football team.

His main business partner is on the board of Warren Buffett's Berkshire Hathaway investment firm. He himself has Emmy awards and sits on a telecoms and broadcast empire that has reportedly seen his net worth rise above €500m.

So ambition is not an issue.

In 2013, his investment firm Granahan McCourt acquired Enet in a €42m deal (backed by another US capital investment company, Oak Hill). Enet runs over 90 of Ireland's 'metropolitan area networks', regional rings of fibre that are used by local telecoms operators to provide broadband and other phone-related services.

In 2014, McCourt underlined his Irish telecoms aspirations by acquiring another Irish operator, Airspeed Telecom, for an undisclosed sum.

In all, McCourt and his associates have sunk €100m into their Irish operations.

But it's hard to see the company's current capital investment in rolling out Irish broadband infrastructure as totally separate to the firm's aspirations to winning the upcoming National Broadband Plan tender.

With contracts to serve 542,000 rural homes and businesses up for grabs, Enet needs to reinforce to Irish authorities that it is a credible local infrastructure player which can operate at scale.

McCourt believes that it is doing precisely that.

"We're the most qualified," he says. "We've demonstrated that we can build a network faster than anyone else. We've also demonstrated that we're the only wholly open access wholesale network."

McCourt would also like the world to know that he's around for the long haul, come what may.

"I had a chance to exit recently and didn't," he says, referring to moves by key investor Oak Hill to divest itself of its shareholding in Enet.

"Because we're long term. But I think that Eircom shareholders exit every chance they get. Which is not exactly a long term commitment to the Republic Of Ireland.

"Eircom chooses to sell out more often than I change my socks." (McCourt's remarks were made before last weekend's revelations that Eir shareholders may sell stakes to French billionaire Xavier Niel.)

"We build, we're long term. We're everything that a country wants or should want when they talk about businesses moving into their country. There's been a lot of hot money coming in and out of Ireland over the last five years. And we've already spent €100m since I've been here."

So what happens when Enet gets to its 115,000 premise rollout target in those Irish towns? "Hopefully we'll build more," says McCourt.

The Bostonian may have his eye on further European broadband expansion. Next month, he will deliver a key lecture to the World Broadband Forum on 'how Europe should tackle its rural broadband dilemmas'.

A successful Irish rural rollout might considerably bolster his European credibility in this area. Winning the National Broadband Plan tender - or part of it - would be even better.

As for how that will land, he says he honestly doesn't know.

"It's a process. We don't really know where we are right now. But I know that everybody freaks out when you talk about the National Broadband Plan."

With Siro yet to confirm whether it will stay in the bidding, and a tender still some way off, McCourt may not be the only one with such fears.

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