UPDATE2 Financial Questions for Future of Welsh Wireless ISP eXwavia

Powys-based ISP eXwavia, which has until fairly recently been busy deploying fixed wireless broadband networks into various communities around rural Wales, appears to be facing a degree of financial uncertainty after it was confirmed that taxpayers money from the Welsh Government was being used to help support the provider.

During a recent Q&A session of the Welsh Assembly, which has been uncovered by ISPreview.co.uk, the Welsh Minister for the Economy, Science and Transport, Edwina Hart, is asked a series of probing questions by Antoinette Sandbach, Assembly Member for North Wales, about the WG’s involvement with eXwavia.

The exchange reveals that eXwavia has already received a “Make Safe” grant worth £143,000 and a loan to the value of £162,000. On top of that there’s a suggestion that Finance Wales, which provides short-term loan finance from the Wales Capital Growth Fund to help Welsh SMEs “tender for larger contracts or increase purchasing power“, might be about to throw £1.4 million at the ISP and this could give the WG a shareholding of around 20% in the business.

Antoinette Sandbach (North Wales): Will the Minister confirm a ‘Make Safe’ grant was provided to Exwavia in December 2013 of £140,000 and that a loan of £160,000 was made to Exwavia in January 2014?

Edwina Hart: Exwavia was awarded £143,000 of de minimis support in December 2013 [i.e. small amounts of state aid that do not require European Commission approval] and a short term loan of £162,000 at the end of January 2014.

—-

Antoinette Sandbach (North Wales): Will the Minister confirm that an investment of £1.4 million is being made by Finance Wales in April 2014 and that Finance Wales will receive a 20% share of Exwavia in return?

Antoinette Sandbach (North Wales): Will the Minister confirm what steps were taken by Finance Wales to inform the Minister for Natural Resources and Food of a potential conflict of interest when considering the time deadline for the removal of paper forms and the Government’s own potential interest in an internet service provider company?

Edwina Hart: Finance Wales is a subsidiary of the Welsh Government and operates at arms length. Individual investment decisions are therefore a matter for Finance Wales.

It’s known that some wireless ISPs have faced increased pressure as a result of the national Broadband Delivery UK (BDUK) scheme, which has made a habit out of overlooking the existing coverage created by wireless networks in favour of BT’s fixed line superfast broadband FTTC/P platform. But it’s not presently clear how much of an impact this has had on eXwavia, although their top home package only offers 20Mbps (below the UK’s definition of “greater than 24Mbps” for a “superfast” service).

Furthermore eXwavia seems to have been fairly quiet over the past year, just as the BDUK deployments began, and the company accounts also point to some recent management changes. In particular, eXwavia’s often outspoken founder and ardent rural broadband campaigner, Annette Burgess, resigned in late 2013. Since then a string of new Directorship appointments have been made.

It now looks as if eXwavia’s future could be dependent upon whether or not they can secure the mooted £1.4m from Finance Wales, but quite how this would then be spent remains unclear. In addition, the Companies House records list a very recent change of name from EXWAVIA LIMITED to XWAVIA LIMITED. Earlier today we shot off a message to the ISP but have yet to receive a reply.

UPDATE 5:33pm

A spokesperson for eXwavia has told ISPreview.co.uk that they haven’t yet received any funding from Finance Wales, although they are “in the process of concluding talks with Finance Wales and with discussions being on-going we can offer no further comment at this stage.”

UPDATE 11th April 2014

It might not yet be official but a leaked Finance Wales document, which has been seen by ISPreview.co.uk, appears to confirm that a loan of £800,000 will be released to eXwavia Xwavia Limited (somewhat less than the £1.4m originally talked about); provided they can satisfy some standard criteria to ensure that the business and its property are in a satisfactory state.

The loan will be paid to the ISP in three tranches (£300k, £300k and then £200k) and the 1st payment will occur once Xwavia has completed all the necessary bits and bobs to satisfy Finance Wales. After that the 2nd payment will be made on or before 31st August 2014 and the final payment is then expected on or before 28th February 2015.

As with any loan Xwavia will need to re-pay the money, provided they don’t go under. The question of precisely what the money will be used for remains unanswered, although it would potentially also make the business more attractive to a buyer. Meanwhile several rival wireless ISPs have expressed shock and surprise to us that so much money is being put into Xwavia.