The UK Must Not Deter the Capital It Says It Wants
We are among the world’s leading investors in infrastructure and we believe that fibre broadband is central to unleashing innovation and capturing the full potential of the digital revolution and AI. We have invested billions of pounds in the sector in the UK on the basis of the conviction that the country has long offered what long-term capital values most: clear rules, independent institutions and predictable decisions.
Two decisions taken by the British state in the last couple of weeks give us cause to question whether that remains the case. First, the Government’s orchestration of BT’s acquisition of TalkTalk – understandably fixing a short-term problem but in a way that entrenches the long-term position of the incumbent. Second, the CMA’s interim report concerning a major fibre infrastructure transaction.
Growth is the Government’s defining mission, and it has asked regulators, the CMA foremost among them, to support it. The CMA has committed to act with pace, predictability, proportionality and transparency. Full-fibre broadband is central to the growth agenda, and it is being built almost entirely with private capital.
Yet the CMA has provisionally blocked consolidation in the fragmented and financially strained fibre market. The decision rests on a highly speculative counterfactual: that another company would have made the acquisition instead, and so should be treated as its preferred buyer. That other company had the opportunity in a competitive sale process, and it did not succeed.
Our concern is not any single deal but the signal it sends. Investors can price risk and accept outcomes they do not favour. What they cannot readily accommodate is uncertainty about the principles on which decisions are made. Capital flows to markets where the rules are clear, consistent and predictable.
If outcomes turn on hypothetical counterfactuals rather than real market choices, the capital that challenges the incumbent and builds the UK’s networks will go elsewhere. That would undermine both the Government’s growth ambitions and the UK’s reputation as a reliable home for long-term investment, and would ultimately leave UK consumers and businesses worse off.
Signed for and on behalf of:
Advencap, Digital Bridge, InfraVia Capital Partners, Soho Square Capital.