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Risk and Reward: Operators Need Flexible Investment Funds

Well, better late than never – at least there's no competition for such projects, so there's no risk that someone else will get there first. But it does make us think about the decision making process in the telecoms industry. Year after year, we see operators undertaking lengthy reviews of projects that require investment. In some cases, this process for even relatively small projects and services – say, less than €2 million – take years. And there are most definitely competitors eager to enter the market and steal a march on the establishment.

Why does it take so long? When you consider net revenues in the industry and the profits that are still being enjoyed in many quarters, it's difficult to understand why such projects are subject to such scrutiny. We are not suggesting that overall diligence should be relaxed, but perhaps it's time to think about such projects in a different why. Why can't operators reserve a certain percentage of their revenues for investment in projects that can have an accelerated time to market? Just as a certain percentage is nominated for R&D, a fund of, let's say, 1% of revenue could be held back for riskier projects that don't have to be subject to the same investment criteria as others.

By holding a sort of "float", they could move quicker, unlock investment and accept a higher level of risk – which could ultimately lead to greater returns and accelerate both innovation and time to market. Just a thought. Certainly, something needs to change – because the number of competitors offering services to customers continues to grow. HS2 has taken about 15 years so far: we must wait until the 2020s before the first trains will run. Sometimes it seems as if operators run to the same timetable.