Subsea Cables & Internet Infrastructure

The chart tells us that Ireland despite its low tax rates is quite costly with the highest power rates in the EU. It is often joked that a data centre is a power reseller and there's a lot of truth in that statement. For example, Equinix reports that power and cooling are 80% of its infrastructure operating expense. In general, a data centre's overall operating expense can be as much as 50% electricity. From what I can tell Irish data centre demand for electricity has grown much faster than the country's power capacity. Data centres consume 21% of Ireland's electricity versus 18% for households. This is an astonishing figure.  High German rates reflect the failed Energiewende. The system costs of wind and solar are extremely high in Germany and both sources are heavily subsidized via guaranteed tariffs because the load factors (annual capacity utilization rates) are very low. For example, a German solar farm only operates at 10% of capacity on an annual basis whereas Am...

The private credit company P Capital Partners has ousted this ambitious project's founders and seized control. It appears P Capital extended a loan to finance Eastern Light back in 2021. As is standard, the debt covenants probably included the right to oust management and become the company's owner if certain conditions were not met. The new owners specialize in offering high interest rate, loans so that companies can avoid equity dilution. According to the company's press release, prior management was unable to meet the key requirement of new equity financing. Hence they were fired. It is important to understand how these greenfield projects work. Generally, founders invest money in the project as equity. Since these projects are unlikely to generate cash flow for many years, equity is the appropriate financing. The project is high risk and can only be justified if there are high returns.  Banks and other credit providers generally finance projects that already are genera...

Eastern Light is building a hybrid subsea-terrestrial dark fibre ring connecting Sweden, Finland, the Baltics, Germany, Denmark, and Norway. This morning I interviewed their sales director to better understand this ambitious project. The fibre pair count is 3x 144 pairs or 432 in total. No lit optical circuits or wavelengths will be sold. Instead, customers will be leasing or purchasing via IRU fibre pairs that they will light using their own equipment. There are ILAs for the subsea spans located   on islands, but the short distances make them an option, not a necessity. However, some customers will undoubtedly prefer buying less and optically amplifying to juice the transmission rates. Because it is a dark fibre network, the customer base will be predominantly hyperscalers, big carriers including the incumbents (Telia's international network is old), university research consortiums, governments including their national militaries, NATO, and banks. In particular, hyperscalers are e...