Mike Constable has logged many hours in digital infrastructure.
He's the mind behind Infra-Analytics Pte Ltd, a strategic consulting and advisory firm. His experience boasts time spent time in leadership and strategic roles, commercial, technical, and project management positions on both the supply and investment side.
Mike credits much of his expertise to time spent across these different roles, from the boardroom to cable ships. This diversity of experience has given Mike a broader, more comprehensive view of global digital infrastructure.
We're thrilled to tap into some of that expertise with Mike joining TeleGeography's Preferred Partners program. (This network of telecom professionals is on deck to help us apply our data to new research projects. Exciting stuff.)
Mike was generous enough to chat with the TeleGeography team about his take on the industry in 2024. Read our full conversation below.
How did you get into the infrastructure space? Were you always interested in technology and communication? Was it a happy accident?
Like many in the industry, I discovered the fascinating world of subsea cables by accident.
Literally days after completing my NZ undergrad degree, I was floating around the South China Sea on a very small survey vessel, surveying a cable route during one of the worst Southwest monsoon seasons in recent history. A month of violent seasickness—definitely not a happy time.
However, from there I joined ASN in London, transitioning through field and office-based marine engineering, project, and commercial management roles to the investor side at then-start-up Global Crossing based in Bermuda, then NYC. My time at Global Crossing was incredible, as was what we achieved, deploying a global network spanning four continents and over 25 countries in five short years, was unprecedented.
After venturing back to Asia, Pacnet Global provided the opportunity to develop yet another trans-Pacific system (Unity) before moving to a start-up, prior to my taking a corporate strategic role with Global Marine Group. That led to being seconded as CEO of Huawei Marine.
I will add here, leading an international joint venture supplier was an immensely difficult yet rewarding challenge, notwithstanding my remit to commercialize the R&D investment and gain market share—all while navigating the complex geopolitics that hit the sector in 2019 and increasingly influences the industry ecosystem.
It has been, and continues to be, an extremely rewarding, happy accident that has facilitated working with talented people from all cultures and walks of life, in over 60 countries across the globe.
It has been, and continues to be, an extremely rewarding, happy accident that has facilitated working with talented people from all cultures and walks of life, in over 60 countries across the globe.
After 30 years in this industry, I still feel privileged to contribute to our industry. An industry committed to developing critical infrastructure in the most hostile environment on the planet, with cutting-edge technology that connects us all and drives global economic transformation.
What do you see as the best training ground for becoming an expert in this area?
I don’t think there is any one best training ground that leads to being an expert. We never stop learning regardless of our experience.
However, I do believe that working from the ground up, including time "in the field" gives people the broad fundamentals and insight into what we actually do, and equally important, the real and practical challenges we face.
Few people who have built a career into senior management have ever been on an operational cable ship; yet the marine environment remains the highest risk and cost element of a system investment—except perhaps the regulatory regimes that are becoming increasingly complex to navigate.
I would encourage newcomers to seize opportunities to rotate through corporate functions, whether it be sales, technical, project management, or commercial roles. This gives a deeper appreciation of the impact of decision-making, both upstream & downstream within the organization itself.
I would encourage newcomers to seize opportunities to rotate through corporate functions, whether it be sales, technical, project management, or commercial roles. This gives a deeper appreciation of the impact of decision-making, both upstream & downstream within the organization itself. Take a risk, be curious and be courageous, move between functions and across organizations. Those experiences will underpin a solid knowledge base and enhance skill sets.
Finally, in my humble experience, having exposure to both the supply side and investment side adds perspective and aids an innate understanding of the respective issues, concerns, and motivations that each side has. It strengthens negotiating skills and the appreciation of strategic relationships and stakeholder management, which remain critical success factors on both sides of the supply/investment fence.
Tell us about some of your recent projects with Infra-Analytics. What projects have been the most exciting to you over the last year?
I founded Infra-Analytics primarily to focus on providing strategic insight and corporate advisory services to the investment community. This includes digital infra-funds, private equity, venture capital, institutional and multi-lateral banks— as I believe this sector is underserved by experienced consultants.
I'm seeing the investment community increasingly looking beyond physical infrastructure to understand the broader ecosystem that services the deployment of subsea cable networks.
I'm seeing the investment community increasingly looking beyond physical infrastructure to understand the broader ecosystem that services the deployment of subsea cable networks. KKR’s investment in Optical Marine is a recent example. Cerberus Capital acquired SubCom in 2018, and JF Lehman & Co. also acquired Global Marine from another private equity group HC2 Holdings in 2020.
Unfortunately, I cannot name the specific projects I’ve been involved with. Suffice to say, I’ve worked closely with private equity on M&A transactions and other investment opportunities in this space. If I were to identify what's been the most exciting, that would be an M&A transaction that I germinated and introduced to an infra-fund, which remains positive and ongoing. I’m sure it will be covered by the media post-closing.
On that note, what are the biggest challenges the industry is facing in 2024?
Stating the obvious, right now the supply-demand metrics associated with vessels are a significant challenge. This is not only problematic for the EPC vendors and independent ship operators, but a problem for the entire industry ecosystem. Why?
We have an aging vessel fleet with no sustainable replacement solution because the prevailing commercial models just don’t work to raise finance for new-build investment.
Currently, we have a fleet of 54 globally recognized vessels, with a further seven coming online in Asia this year. However, these assets are all small conversions (vis-à-vis new builds), are somewhat geographically constrained, some having little or no experience, and with a substantial proportion are Chinese assets—therefore geopolitically constrained.
The average age of the global fleet is 24 years, with approximately 30% (16 assets) exceeding a 40-year lifespan in the next 10 years.
Unless we as an industry collaborate to reinvent commercial models, particularly the maintenance models, replenishing the fleet will continue to be a challenge and the current inefficiencies in the global maintenance footprint will remain. The introduction of fuel-efficient and/or green alternative fuels will also not happen. This is an industry problem that system owners need to address together with vessel providers. As an industry, we cannot afford to kick the can down the road any longer.
It’s interesting that we’ve already seen so many infrastructure headlines make waves in the mainstream media in 2024. From cable outages in the Red Sea and West Africa, to questions of geopolitics, to new cable announcements—what do you make of this spotlight? Is this the new normal for the subsea cable industry? Have you felt the impact of this?
I mentioned earlier, governments and multilateral security institutions, such as NATO, are now swiftly recognizing the critical nature of subsea infrastructure both in terms of the economic criticality and security implications of digital connectivity.
Prevailing conflicts and geo-strategic hotspots (e.g. South China Sea) coupled with the Nordstream pipeline incident conflicts—while late, it’s understandable that the media now have a keen interest in covering any story, however accurate or not their reporting is. It's a new norm—one I am regularly consulted to comment on, as are others in the industry, including TeleGeography.
Right. Thinking about the growing attention that digital infrastructure is getting, what’s your impression of the coverage, broadly? Is the media getting it right? Are there nuances that mainstream reporting is missing about the dynamics of the sub cable ecosystem?
What is a concern is some reporters’ underlying desire to sensationalize their reporting or consult supposed experts who don't provide knowledgeable or accurate information. In a recent article on the Red Sea issue, a retired military expert was cited as remarking that the Houthis could not damage subsea cables, as they needed sophisticated underwater robots to cut the cables. The majority of the 200-odd cable faults per annum we experience caused by fishing vessels proves otherwise.
An accurate spotlight can only be in the industry’s benefit, inaccurate or sensationalist reporting isn’t.
Other nuances that feed international interest in our industry are isolating events such as the Tongan earthquake and the competing geopolitical interests in the South China Sea and Indo-Pacific regions. These geopolitical issues will keep our industry in mainstream media reporting for some time yet.
Finally, what are the biggest challenges your clients are facing in 2024?
From a system investment perspective, the underlying data-demand tailwinds remain strong. However, current macroeconomic headwinds are challenging if financing is not underpinned by a strong balance sheet.
If we ignore the significant investment from the OTTs, there is a potential investment gap looming.
If we ignore the significant investment from the OTTs, there is a potential investment gap looming. We saw a major exodus of U.S. and European telco investment in the late 1990’s, as carriers carrier’s disrupted the market. Telco investment remains in some regions—Asia and the Middle East—however, telco business models are changing as capex allocation shifts toward services and other assets like mobile. Or that which provides faster, sustainable returns, with a lower risk profile than subsea cables.
Additionally, some telcos are splitting their organizations into Asset Co. and Services Co., with a view to divesting their asset base. That doesn’t mean telcos won’t continue to invest in fiber connectivity. What it does mean, in my opinion, is that telcos are more reluctant to invest in cables at a green-field stage, but will secure connectivity through fiber-based opex investments as new systems are lit..
We do see an investment appetite from data centers, albeit minimal. Keppel and NTT are two in Asia that are active in green-field subsea investment in Asia.
From a client perspective, digital infrastructure’s emergence as a new asset class is an attractive proposition for traditional infrastructure funds.
However, these funds — while substantial drivers of data center, mobile, and terrestrial network investments — are not investing in green-fields subsea projects. Unfortunately, the financial metrics of a subsea cable as a standalone asset isn’t an attractive investment proposition when competing for capital with other asset classes.
What I think is lacking is a strategic perspective. For example, the way scaling a subsea network that's viewed as a connectivity platform, which compounds value across other digital infrastructure assets, is a different value proposition than a single, stand-alone cable asset. Overlaying a software platform then creates a powerful, one-stop Network as a Service (NaaS) platform, that extends across an investors digital asset portfolio and product stack.
Select European funds are realizing this strategic benefit through acquisition of legacy networks and/or distressed assets to rapidly build scale and connectivity touchpoints.
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