Connected territories and digitalization: a constantly expanding economy

Connected territories and digitalization: a constantly expanding economy

Optical fiber, 5G, smart meters, IoT, charging stations for electric vehicles, connected security systems… The rapid development of digital technologies offers almost limitless growth prospects in multiple markets.

A study carried out by the Boston Consulting Group (BCG) for the large European telecom operators (ETNO) figures at 300 billion euros by 2027 the investments necessary to achieve the very high speed coverage objectives set by the European Union: 150 billion to bring optical fiber to all Europeans and 150 billion to deploy 5G everywhere, even in rural areas. According to this study, current investments should therefore be multiplied by 2.5 in six years!

For its part, the FTTH Council Europe forecasts that the number of homes connected to optical fiber (FTTH/B) in the 27-member European Union and in the United Kingdom will increase from 118 million today to 197 million in 2026. That’s an expected increase of 67% in five years! In a European bloc extended to 39 countries, forecasts predict a total of 302 million households connected to fiber in 2026, compared to 183 million in 2021, an increase of 65%. Germany, the United Kingdom, the Netherlands and Italy are expected to experience the strongest growth, with France and Spain being significantly more mature in this area, and even well ahead of their European neighbors.

The Covid crisis has led to an increase in data traffic but also in demand, which is leading private investors to considerably accelerate their deployment projects for FTTH/B to support the continued increase in traffic. In addition, the launch of national programs (infrastructure and digitalization) and the new European digital objectives for 2025 and 2030 promote the acceleration of connectivity full-fiber in all European countries.

Digital, pillar of European recovery

The digital transition is also at the heart of major European recovery plan of 750 billion euros. In their national recovery plans, Member States have the obligation to devote at least 20% of the funds allocated by the “Next Generation EU” plan to the digital transition. And some, like Germany which is lagging behind, have planned to go well beyond this minimum.

Fiber optic and 5G coverage is driving investments today and their deployment will make new uses and other developments possible tomorrow. Connected health, home automation, intelligent building, industry 4.0, city of the future…. technological developments are continuous and the uses of tomorrow are difficult to evaluate today as the field of possibilities seems wide.

According to the European Council, the value of the data economy in the 27-member European Union is expected to increase from €301 billion in 2018 to 829 billion euros in 2025. By 2030, these innovations should be integrated, with those that will emerge by then, into generalization smart cities.

As for the global IoT market, it is expected to reach 1.386 billion dollars by 2026, up from $761 billion in 2020, with an annual growth rate of more than 10%, according to a recent Mordor Intelligence report. For Europe, AT Kearney estimates that the IoT represents an economic potential of nearly 940 billion euros by 2025… And the strategy firm estimates at 80 billion euros per year from 2025 the market for technological solutions to be implemented in Europe to take full advantage of the benefits of the Internet of Things.

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In the energy sector, the transition is boosting growth. The penetration of smart electricity metersin Europe, which make it possible to better control energy consumption, should increase from 50% in 2021 to 72% in 2026, according to the Swedish analysis firm Berg Insight. While at the end of 2020 Europe had nearly 150 million smart electricity meters, it is expected to exceed 227 million units in 2026, an increase of 84% in 6 years. With in particular strong growth in the countries of central, eastern and south-eastern Europe. Added to this is the necessary adaptation of electricity networks, the development of new methods of producing green energy, or the deployment of charging station infrastructures for electric vehicles. The latter has become critical for electric mobility to truly take off while the market share of electric vehicles has doubled in Europe.

Players specialized in deployment to end customers

With large telecoms, IT and energy operators focusing primarily on virtual, software, development and cloud solutions, this rapid evolution creates an increased need for external players to deploy all these technologies up to to the “last mile”, in homes and businesses. Players capable of offering large digital service operators the outsourcing of local, installation, maintenance and upgrade services, for the benefit of end customers, individuals and SMEs.

They are approaching this promising market using different approaches. Some players develop multi-market expertise but with a local scope such as Proxiserve, In France. From an initial focus on the home service markets (heating and electricity), the former Veolia subsidiary now displays ambitions in the field of eco-mobility, with the acquisition in 2021 of ZEBorne, a start-up specializing in vehicle charging stations. Others are more internationalized and operate mainly for the benefit of telecommunications operators, by deploying and maintaining the fixed and mobile telecom networks of their customers (operators, local authorities and major accounts), from the design of local architectures to final connections, passing through the antennas. This is particularly the case of Circet, which has built its growth mainly on the acquisition of companies in the same sector, and is developing in the Benelux countries and in Germany, and now in the United States. Still others have opted for the replication of a very efficient initial model, adapting it to new emerging technology offerings. This is particularly the case of Solutions 30 which, based on experience acquired with ADSL in the early 2000s, today ensures the installation and maintenance of equipment in several sectors: telecoms (fiber optics, proximity 5G antennas), energy (Linky meter, charging stations for electric vehicles), security (access control, etc.)… A model that seems to be proving itself with strong uninterrupted growth since 2005, in France, like in Europe. An international dimension illustrated in 2018 by a contract of €70 million/year over five years, signed with the Belgian operator Telenet, by the acquisition of the British Comvergent at the end of 2020, or by the signing of a contract to deploy optical fiber in Italy for TIM.

Figures which clearly illustrate the enormous growth potential which, in the next ten years, opens up to deployment operators, whatever the sectors of digital innovation considered, and whatever the strategies adopted by the stakeholders concerned, who have become the essential interlocutors between the supply and demand of digital services.