Mike Constable has logged many hours in digital infrastructure.
He is the thoughts behind Infra-Analytics Pte Ltd, a strategic consulting and advisory agency. His expertise boasts time hung out in management and strategic roles, business, technical, and venture administration positions on each the availability and funding aspect.
Mike credit a lot of his experience to time spent throughout these completely different roles, from the boardroom to cable ships. This variety of expertise has given Mike a broader, extra complete view of worldwide digital infrastructure.
We’re thrilled to faucet into a few of that experience with Mike becoming a member of TeleGeography’s Most well-liked Companions program. (This community of telecom professionals is on deck to assist us apply our information to new analysis tasks. Thrilling stuff.)
Mike was beneficiant sufficient to talk with the TeleGeography group about his tackle the business in 2024. Learn our full dialog under.
How did you get into the infrastructure area? Had been you all the time excited by know-how and communication? Was it a cheerful accident?
Like many within the business, I found the fascinating world of subsea cables by chance.
Actually days after finishing my NZ undergrad diploma, I used to be floating across the South China Sea on a really small survey vessel, surveying a cable route throughout one of many worst Southwest monsoon seasons in current historical past. A month of violent seasickness—positively not a cheerful time.
Nevertheless, from there I joined ASN in London, transitioning via discipline and office-based marine engineering, venture, and business administration roles to the investor aspect at then-start-up World Crossing primarily based in Bermuda, then NYC. My time at World Crossing was unimaginable, as was what we achieved, deploying a world community spanning 4 continents and over 25 international locations in 5 brief years, was unprecedented.
After venturing again to Asia, Pacnet World offered the chance to develop one more trans-Pacific system (Unity) earlier than shifting to a start-up, previous to my taking a company strategic function with World Marine Group. That led to being seconded as CEO of Huawei Marine.
I’ll add right here, main a world three way partnership provider was an immensely troublesome but rewarding problem, however my remit to commercialize the R&D funding and achieve market share—all whereas navigating the advanced geopolitics that hit the sector in 2019 and more and more influences the business ecosystem.
It has been, and continues to be, a particularly rewarding, pleased accident that has facilitated working with proficient folks from all cultures and walks of life, in over 60 international locations throughout the globe.
It has been, and continues to be, a particularly rewarding, pleased accident that has facilitated working with proficient folks from all cultures and walks of life, in over 60 international locations throughout the globe.
After 30 years on this business, I nonetheless really feel privileged to contribute to our business. An business dedicated to creating crucial infrastructure in essentially the most hostile surroundings on the planet, with cutting-edge know-how that connects us all and drives international financial transformation.
What do you see as the perfect coaching floor for changing into an skilled on this space?
I don’t suppose there’s anyone finest coaching floor that results in being an skilled. We by no means cease studying no matter our expertise.
Nevertheless, I do imagine that working from the bottom up, together with time “within the discipline” provides folks the broad fundamentals and perception into what we really do, and equally essential, the actual and sensible challenges we face.
Few individuals who have constructed a profession into senior administration have ever been on an operational cable ship; but the marine surroundings stays the very best threat and value ingredient of a system funding—besides maybe the regulatory regimes which can be changing into more and more advanced to navigate.
I’d encourage newcomers to grab alternatives to rotate via company features, whether or not it’s gross sales, technical, venture administration, or business roles. This offers a deeper appreciation of the influence of decision-making, each upstream & downstream throughout the group itself.
I’d encourage newcomers to grab alternatives to rotate via company features, whether or not it’s gross sales, technical, venture administration, or business roles. This offers a deeper appreciation of the influence of decision-making, each upstream & downstream throughout the group itself. Take a threat, be curious and be brave, transfer between features and throughout organizations. These experiences will underpin a stable information base and improve talent units.
Lastly, in my humble expertise, having publicity to each the availability aspect and funding aspect provides perspective and aids an innate understanding of the respective points, considerations, and motivations that every aspect has. It strengthens negotiating abilities and the appreciation of strategic relationships and stakeholder administration, which stay crucial success components on each side of the availability/funding fence.
Inform us about a few of your current tasks with Infra-Analytics. What tasks have been essentially the most thrilling to you during the last yr?
I based Infra-Analytics primarily to give attention to offering strategic perception and company advisory providers to the funding neighborhood. This contains digital infra-funds, personal fairness, enterprise capital, institutional and multi-lateral banks— as I imagine this sector is underserved by skilled consultants.
I am seeing the funding neighborhood more and more wanting past bodily infrastructure to grasp the broader ecosystem that providers the deployment of subsea cable networks.
I am seeing the funding neighborhood more and more wanting past bodily infrastructure to grasp the broader ecosystem that providers the deployment of subsea cable networks. KKR’s funding in Optical Marine is a current instance. Cerberus Capital acquired SubCom in 2018, and JF Lehman & Co. additionally acquired World Marine from one other personal fairness group HC2 Holdings in 2020.
Sadly, I can’t identify the particular tasks I’ve been concerned with. Suffice to say, I’ve labored intently with personal fairness on M&A transactions and different funding alternatives on this area. If I have been to determine what’s been essentially the most thrilling, that may be an M&A transaction that I germinated and launched to an infra-fund, which stays optimistic and ongoing. I’m certain will probably be lined by the media post-closing.
On that notice, what are the most important challenges the business is dealing with in 2024?
Stating the apparent, proper now the supply-demand metrics related to vessels are a big problem. This isn’t solely problematic for the EPC distributors and impartial ship operators, however an issue for all the business ecosystem. Why?
We’ve an getting old vessel fleet with no sustainable substitute resolution as a result of the prevailing business fashions simply don’t work to boost finance for new-build funding.
At present, we now have a fleet of 54 globally acknowledged vessels, with an extra seven coming on-line in Asia this yr. Nevertheless, these belongings are all small conversions (vis-à-vis new builds), are considerably geographically constrained, some having little or no expertise, and with a considerable proportion are Chinese language belongings—subsequently geopolitically constrained.
The common age of the worldwide fleet is 24 years, with roughly 30% (16 belongings) exceeding a 40-year lifespan within the subsequent 10 years.
Except we as an business collaborate to reinvent business fashions, notably the upkeep fashions, replenishing the fleet will proceed to be a problem and the present inefficiencies within the international upkeep footprint will stay. The introduction of fuel-efficient and/or inexperienced different fuels will even not occur. That is an business drawback that system house owners want to handle along with vessel suppliers. As an business, we can’t afford to kick the can down the highway any longer.
It’s fascinating that we’ve already seen so many infrastructure headlines make waves within the mainstream media in 2024. From cable outages within the Pink Sea and West Africa, to questions of geopolitics, to new cable bulletins—what do you make of this highlight? Is that this the brand new regular for the subsea cable business? Have you ever felt the influence of this?
I discussed earlier, governments and multilateral safety establishments, corresponding to NATO, are actually swiftly recognizing the crucial nature of subsea infrastructure each when it comes to the financial criticality and safety implications of digital connectivity.
Prevailing conflicts and geo-strategic hotspots (e.g. South China Sea) coupled with the Nordstream pipeline incident conflicts—whereas late, it’s comprehensible that the media now have a eager curiosity in overlaying any story, nevertheless correct or not their reporting is. It is a new norm—one I’m usually consulted to touch upon, as are others within the business, together with TeleGeography.
Proper. Enthusiastic about the rising consideration that digital infrastructure is getting, what’s your impression of the protection, broadly? Is the media getting it proper? Are there nuances that mainstream reporting is lacking concerning the dynamics of the sub cable ecosystem?
What’s a priority is a few reporters’ underlying need to sensationalize their reporting or seek the advice of supposed consultants who do not present educated or correct data. In a current article on the Pink Sea situation, a retired army skilled was cited as remarking that the Houthis couldn’t injury subsea cables, as they wanted refined underwater robots to chop the cables. The vast majority of the 200-odd cable faults every year we expertise attributable to fishing vessels proves in any other case.
An correct highlight can solely be within the business’s profit, inaccurate or sensationalist reporting isn’t.
Different nuances that feed worldwide curiosity in our business are isolating occasions such because the Tongan earthquake and the competing geopolitical pursuits within the South China Sea and Indo-Pacific areas. These geopolitical points will preserve our business in mainstream media reporting for a while but.
Lastly, what are the most important challenges your shoppers are dealing with in 2024?
From a system funding perspective, the underlying data-demand tailwinds stay sturdy. Nevertheless, present macroeconomic headwinds are difficult if financing is just not underpinned by a robust stability sheet.
If we ignore the numerous funding from the OTTs, there’s a potential funding hole looming.
If we ignore the numerous funding from the OTTs, there’s a potential funding hole looming. We noticed a significant exodus of U.S. and European telco funding within the late 1990’s, as carriers provider’s disrupted the market. Telco funding stays in some areas—Asia and the Center East—nevertheless, telco enterprise fashions are altering as capex allocation shifts towards providers and different belongings like cell. Or that which offers sooner, sustainable returns, with a decrease threat profile than subsea cables.
Moreover, some telcos are splitting their organizations into Asset Co. and Companies Co., with a view to divesting their asset base. That doesn’t imply telcos gained’t proceed to spend money on fiber connectivity. What it does imply, in my view, is that telcos are extra reluctant to spend money on cables at a green-field stage, however will safe connectivity via fiber-based opex investments as new methods are lit..
We do see an funding urge for food from information facilities, albeit minimal. Keppel and NTT are two in Asia which can be lively in green-field subsea funding in Asia.
From a shopper perspective, digital infrastructure’s emergence as a brand new asset class is a gorgeous proposition for conventional infrastructure funds.
Nevertheless, these funds — whereas substantial drivers of information heart, cell, and terrestrial community investments — should not investing in green-fields subsea tasks. Sadly, the monetary metrics of a subsea cable as a standalone asset isn’t a gorgeous funding proposition when competing for capital with different asset lessons.
What I feel is missing is a strategic perspective. For instance, the way in which scaling a subsea community that is considered as a connectivity platform, which compounds worth throughout different digital infrastructure belongings, is a special worth proposition than a single, stand-alone cable asset. Overlaying a software program platform then creates a robust, one-stop Community as a Service (NaaS) platform, that extends throughout an traders digital asset portfolio and product stack.
Choose European funds are realizing this strategic profit via acquisition of legacy networks and/or distressed belongings to quickly construct scale and connectivity touchpoints.
TeleGeography’s Most well-liked Companions characterize a community of telecom professionals with whom we have collaborated, introduced, shared intel, and mapped main networks. This group is on the market to work on particular analysis tasks that require assets past TeleGeography’s commonplace product catalog.
To inquire about changing into considered one of TeleGeography’s Most well-liked Companions, e-mail data@telegeography.com or register your curiosity over right here.
