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The compelling investment opportunity in digital infrastructure

The compelling investment opportunity in digital infrastructure - Image by Andreas Glöckner from Pixabay

In our increasingly interconnected world, it is crucial that we invest in our digital infrastructure. Digital infrastructure provides the backbone for the information and communication technology that so many people rely on daily. Doing so will help drive economic growth and sustainable development while providing a golden opportunity for investors to reassess their portfolios after a turbulent year.

This is because digital infrastructure can offer sustainable long-term income in a historically low-interest-rate environment where global dividends have suffered their worst fall since 2009. Furthermore, investment strategies that help address large scale societal challenges are more appealing than ever.

Boosting the resilience of our digital infrastructure

Arguably the most overlooked critical infrastructure today is digital infrastructure. That is everything from the undersea and underground fibreoptic cables that connect businesses and homes to the internet, to the data centres where the internet ‘lives’, to the towers and small cells that carry data wirelessly to the end-user.

Since the outbreak of the pandemic, we have all seen how indispensable digital technologies have been in keeping us connected. Business, entertainment, social interaction, and increasingly education have been solely reliant on fast and dependable internet access.  As more and more of our lives move online, the reliance on this infrastructure increases.

The Covid-19 pandemic has tested the resilience of our digital infrastructure. It has also revealed that we need to invest a huge amount to prepare it for the future.

The figures make for illuminating reading: in Q1 2020, there was a 47% overall increase in internet usage compared to the same quarter in 2019. It was triggered by a surge of internet activity from streaming to video communication following global lockdowns. As we know, the surge of traffic led to many experiencing a rise in connection issues, reflecting that the digital infrastructure we rely on is not as resilient as it could or should be.

The surge of internet usage during 2020/21 and the rise of connection issues cannot, however, be considered an anomaly. Even before the impact of Covid-19, the growth rate of internet traffic was predicted to increase on average by 30% every year and is expected to double by 2022. If anything, the events of the last year have amplified the long-term societal trends and challenges. These are expected to accelerate exponentially over the next decade with the rollout of new technologies like 5G.

Investing in the opportunity

The primary need is to invest in a range of critical digital infrastructure assets including:

  • submarine cables,
  • renewable-energy powered data centres,
  • terrestrial fibre networks
  • radio distribution technologies,
  • and the 5G rollout of distributed antenna systems – the new era of towers

This investment needs to be done in environmentally responsible manner, particularly to reduce the carbon footprint of digital infrastructure, predominantly data centres. The 9 in Digital 9 stands for Goal No. 9 of the UN Sustainable Development Goals. Goal 9 states, “Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.” DGI9 reflects this with our commitment to improving global digital communications in an environmentally sustainable manner, whilst achieving our investment goals of sustainable income and capital growth for investors.

Investor interest shows no sign of slowing down

The emergence of digital infrastructure investment opportunities has been underway for more than half a century and is accelerating. In 2020 alone, almost $400 billion was spent on new digital infrastructure – across fibre, data centres and wireless networks. We will need to spend that amount – and more – every year to prepare digital infrastructure for the future.

Indeed, at DGI9, we have launched a further £100m fundraise of new Ordinary Shares. DGI9 will use this to acquire further assets in line with the Company’s investment objective, identified in the Company’s pipeline of investment opportunities at IPO, as set out in the Prospectus.

Ultimately, due to the exponential demands for supporting the internet, investments in digital infrastructure represent an opportunity to generate sustainable, long-term income while addressing a huge societal challenge.


D9

Digital 9 Infrastructure plc is a newly established, externally managed closed-ended investment company. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet, investing in future proofed, non-legacy, scalable platforms and technologies including (but not limited to) subsea fibre, data centres, terrestrial fibre, tower infrastructure and small cell networks (including 5G).

The Company will focus, primarily, on digital infrastructure investments which are operational and with contracts in place with customer or counterparties where appropriate.

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