The launch of the European Fund for Strategic Investments (EFSI) a year ago has opened new financing opportunities for the digital sector in Europe. EFSI's aim of making Europe investing again is fully aligned with our objective of triggering investments in the digital sector to build a strong data economy. At a time where the Commission and the European Investment Bank (EIB) already see tangible results of the Investment Plan and EFSI, I would like to share some news on one of our recent initiatives with the EIB.
Over the past months, the European Commission has worked with the EIB on designing new financing solutions for broadband projects. Growing demand for such financing solutions is visible across Europe, with a rapid emergence of alternative business models in the broadband sector and many local initiatives being set up to address connectivity needs. Although large telecom operators are investing a significant amount of capital expenditure and a material amount of public subsidies is available, there remains a substantial funding gap for modernising networks in line with the rapidly evolving needs of the Gigabit Society. Especially, important investments needs are identified in the less dense areas, which generally show lower returns on investment than urban areas, but, at the same time, are not eligible for subsidies dedicated to non-profitable rural areas only.
To address this investment challenge in less dense areas, the European Commission together with EIB propose to set up a new commercial fund of a target size of EUR 500 million. National Promotional Banks and Institutions (NPBIs) have also been actively involved in the initiative, which will be the EFSI investment platform for broadband in Europe. The funds coming from the Connecting Europe Facility (CEF), EFSI and the EIB, together with capital from NPBIs and the private sector, will be invested into economically viable broadband projects. The scarcity of financing solutions is particularly pronounced for smaller projects; therefore the focus will be on transactions lower than EUR 30 million.
Ensuring the success of this initiative requires attracting an experienced fund manager, with a strong track record in financing infrastructure and ICT projects, and with the ability to work across several EU countries. The European Investment Bank (EIB) just published a call for expression of interest for a fund manager, who will be responsible for managing this EUR 500 million investment fund for broadband projects. This call will be open for a month.
After the selection of a fund manager, the EIB will prepare for the launch of the fund, expected by the end of 2016.
Another concrete example of our cooperation with the EIB Group is in the creative media space: the Commission is working with the European Investment Fund to set up a Cultural and Creative Sectors Guarantee Facility, funded under the Creative Europe Programme. The Guarantee Facility will start its activities towards financial intermediaries in July 2016.