The consumer shift to streaming platforms and other digital providers may have caused network congestion and put the internet under enormous strain at the start of the pandemic, but it heralded a wave of new investment in digital infra that continued into 2021.

US technology firm Cisco estimates that IP traffic has increased at an annual growth rate of 24 percent since 2016. Over the same time frame, mobile and wired Wi-Fi use has risen by 46 percent, while video traffic has grown by about 31 percent. Globally, the average internet user generated 57GB per month in 2021, up 139 percent from 2016.

Covid has no doubt accelerated the clamour for all things digital, making towers, data centres and fast fibre hot commodities for private investment. Consumer demand for 5G and cloud migration may have been increasing before the arrival of coronavirus, but lockdowns and changing work habits have now firmly made digital technology a priority for both society and businesses.

Active participation

The asset class has also showcased its resilience, despite two years of turbulent market volatility. The importance of digital infra in the global economy is set to intensify. Infrastructure such as fast fibre, alternative fibre-optic routes, cloud migration and mobile network diversification will all be critical to meeting surging demand.

Digital deals and private fundraising thrived in 2021. Stonepeak’s $8.1 billion acquisition of telecoms provider Astound Broadband, the sixth largest cable operator in the US, was one of the largest and most notable.

Astound splits its broadband coverage 80 percent to residential customers and 20 percent to commercial clients, although it expects to grow the latter. Digital infra now accounts for about half of Stonepeak’s fund portfolio, with cumulative value and equity commitments of more than $30 billion.

Europe presented notable opportunities for investors. In June, Canadian manager Cordiant Capital set out plans to launch a private digital infra fund, targeting €750 million, aimed at taking advantage of the growth in 5G across the continent.

Earlier in the year, the manager also exceeded its £300 million ($405 million; €358 million) close target on its London-listed digital infra vehicle, which is expected to invest primarily in data centres, fibre-optic networks and mobile towers in the UK, Europe and North America. Steven Marshall, chairman of the fund and former president of American Towers Corporation, highlighted that digital infra in Europe still lags behind the US.

The North American wireless and data centre market may be highly competitive, but the US still has a significant digital divide between urban centres and rural areas. A report from US think-tank ITIF highlighted this disparity when arguing that last year’s landmark infrastructure bill should have included more funding for digital infra, especially if the US is to compete with rival China.