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Motorways, expressways and urban toll roads, operated under long concessions from the state. A road concession earns money in one of two ways: toll revenue (traffic × toll per vehicle, where the operator takes the demand risk), or a fixed availability payment (a PPP where the government pays for the road being open and maintained, with no demand risk). Pick a real concession below and trace it from the motorway itself through the model to a working returns model.
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The money is earned by the traffic on the road, the toll each vehicle pays (or the availability fee), and the ramp-up; drag the sliders to see how much each matters.
A road concession is a long contract from the state to build, operate and maintain a road, and it earns money in one of two distinct ways. A toll road charges the vehicles that use it: revenue is traffic × toll, so the operator takes the demand risk: if traffic falls, so does the income, but if it grows (or the toll is unregulated), the upside is large. Roads are high-margin: an existing road costs little to operate against its toll revenue, so mature toll roads run at 70–85% EBITDA margins. An availability PPP works the other way: the government pays a fixed availability fee for the road being open, safe and maintained to standard, independent of traffic, so there is no demand risk, only the risk of deductions for under-performance and the government's credit. One is a demand-risk equity story; the other is a contracted, bond-like annuity. In both, the heavy capital line is not annual opex but the periodic resurfacing of the carriageway.
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See also the interactive toll-road simulator and the Cash-flow & DCF model.