Roberto Garcia Merino, Corporate Director of Business Diversification, analyses the expansion of the business base as one of the essential strategies of Red Eléctrica.
The Strategic Plan 2014-2019, approved in February 2015, undertakes the growth of the business base as one of its essential strategies. The main objective is the generation of opportunities for growth and the creation of value for Red Eléctrica through the development of new activities and new business, based on the solid capabilities of the Company and its sound experience. This strategy represents an opportunity not only to support the growth of the Red Eléctrica Group, but also so that the Company’s employees may take on and tackle new projects that foster their professional development.
The quest for alternatives in other areas of business is not new to Red Electrica; we have already amply demonstrated that we like to take on new challenges and that we know how to address and tackle these. In this regard, we have been working in the telecommunications business in Spain for more than 18 years, and have carried out projects internationally, although never with the level of intensity as shown in last two years, a period during which tremendous progress has been made which has enable the Company to take a definitive step towards expanding its business base.
Regarding the field of telecommunications, 2014 was a decisive year for the consolidation of this activity in Red Eléctrica with the acquisition of the commercial rights to use and manage the dark fibre optic network of ADIF (the state-owned Administrator of Railway Infrastructures in Spain); a transaction that resulted to be the most significant of the Group in terms of business development to date. Following this transaction, Red Eléctrica doubled the commercial fibre optic network it manages, from 16,000 km to 33,000 km.
As a result of this transaction, Red Eléctrica has become the leading operator of reference nationwide in the telecommunications infrastructure sector, positioning itself as the largest neutral operator of fibre optic networks in Spain and providing service to the country’s major telecom operators.
2015 was the year of the definitive consolidation of the telecommunications business. A new subsidiary, Red Eléctrica Infraestructuras de Telecomunicación, S.A.U. (REINTEL) was set up exclusively to manage this activity, adding a new dimension to the business and which has quadrupled revenues that were historically received from the commercial operation of our fibre optic network.
The extensive experience in the operation and management of fibre optic networks and the knowledge of the dark fibre market acquired after 18 years working in this sector has helped the Company face this new stage with a solid outlook, mainly due to its position as a neutral operator nationwide and the high levels of quality of service it provides to its customers.
Regarding international investments, the Company, through its subsidiary Red Eléctrica Internacional, has been especially active in recent years in order to expand the Company’s presence in Peru and recently has initiated our activity in Chile.
Red Eléctrica’s presence in Peru, where it has been involved in the development of the transmission grid in the country since 1999, is proof of the ability that Red Eléctrica has in contributing its knowledge and expertise in other countries.
In Peru, Red Eléctrica Internacional owns four companies which have been awarded infrastructure concession contracts (two in service and two under construction) and a fifth company that provides maintenance services for this infrastructure. After having obtained the last two concession contract tenders in 2015, the Company has become the main strategic operator in the south of the country, where it will manage a transmission grid that encompasses 1,200 kilometres of line.
Additionally, in late 2015, Red Eléctrica took a big step forward in the process of consolidating its international activity with the entry into a new country such as Chile. In December last year, Red Eléctrica reached an agreement with E-CL, a subsidiary of Engie, to acquire 50% of the share capital of Transmisora Eléctrica del Norte (TEN). TEN is undertaking one of the most important projects in the country with the construction of a transmission line that will interconnect the two isolated systems that currently make up the Chilean electricity system. The project involves the construction of a 500 kV line of over 600 km in length and that will represent an investment close to 780 million dollars.
In addition, our presence in northern Chile and southern Peru, places the Company in a favourable position regarding a possible interconnection project between the two countries.
Progress made in recent years in the telecommunications business and in the international business scenario allows the Company to positively face the challenges set in its strategic plan, but work must continue on finding new opportunities for business development that are ever more complex and competitive.
The intensity, motivation and enthusiasm with which we are facing these projects are our main guarantee in order to successfully address this new stage, therefore I am convinced that, together, everyone at Red Eléctrica will help meet the challenges that face us.