Rohini Pahwa, Arjun Infrastructure Partners, says identifying digital infrastructure assets with long-term, predictable cashflows and genuine barriers to entry requires a disciplined approach grounded in market structure, counterparties and management quality
Digital infrastructure has become an essential part of the modern economy, but as investors we must be careful not to treat all assets within the sector as equal. Data centres and fibre networks can exhibit very different risk and return profiles depending on regulation, market maturity and business model. At Arjun Infrastructure Partners, we have focused on finding those areas that genuinely fit a core or core-plus mandate — assets that combine stability, scalability and long-term contractual visibility.
When we began building our digital infrastructure strategy, we took a step back to ask what type of investments best suit our capital. Rather than chasing the latest hot subsector, we analysed which markets and models could deliver sustainable returns. Our first study of the UK fibre market, for instance, revealed 77 alternative network operators competing for land grab with limited visibility on top line. It was clear that overbuild would become a problem, and the payback periods could not be justified for a mid-market, core-plus investor.
We then looked across Europe. Spain and France stood out for the maturity of their regulatory frameworks and the strength of their wholesale models. The central question we asked was simple: for every euro invested in the ground, how quickly and how securely will it be returned? Revenue visibility and counterparty quality were therefore critical in assessing opportunities.
Our first investment was in Spain’s Onivia, the largest independent wholesale fibre operator in the country. Onivia owns the network and sells capacity to internet service providers on a neutral basis, reaching around eight million homes and targeting around nine million within next 12 months. The Spanish market is competitive but well organised, with established wholesale arrangements that allow neutral operators to secure long-term contracts with ISPs.
When we began building our digital infrastructure strategy, we took a step back to ask what type of investments best suit our capital.
Rohini Pahwa
Our second investment was in France through Altitude Infra, a concession-based model that combines ownership of the network with construction and operations capabilities. With around 40% take-up, the business benefits from the high level of coordination between regulators, municipalities and operators that typifies the French approach. Importantly, concession renewals tend to reward experienced operators with strong local relationships, supporting long-term cashflow visibility.
Most recently, we invested in Data4 StableCo, one of Europe’s largest stabilised data centres. Here again, the focus is on assets with proven cashflows, not speculative development risk. Investor appetite for digital assets has fluctuated with the interest-rate cycle, but the market environment is now in a more normalised — one where disciplined underwriting and cashflow certainty matter more than ever.
Across Europe, fibre markets display significant divergence. Spain and France are relatively mature and sit within the core or core-plus space. The UK and Germany, by contrast, remain value-add markets. In Germany, while it is common to sign up customers before network build-out, those contracts are often non-binding. The real costs lie in connecting individual homes, particularly in fragmented markets where access to municipal infrastructure can be complex and expensive.
The UK faces its own challenges. Despite regulatory efforts to open access to ‘ducts and poles’, the market remains disjointed. The absence of a wholesale pricing model, labour shortages following Brexit and persistent inflation have all increased rollout costs. These factors make it difficult for fibre networks to exhibit true infrastructure characteristics at this stage of market evolution.
One lesson from our experience across markets is the importance of management quality. In both Spain and France, that combine deep local knowledge with operational discipline. These relationships underpin the credibility and resilience of our assets.
Looking ahead, consolidation is likely to define the next phase of Europe’s fibre markets, particularly in Spainwhere fibre rollout is near complete. Onivia’s acquisition of Digi Telecoms’ network last year was a step towards rationalising the market while supporting Digi’s expansion into new geographies such as Portugal. Each market will evolve differently, and success depends on the ability to adapt strategies accordingly.
For investors seeking to capture the long-term digital growth story without straying from infrastructure’s core principles, the sweet spot lies where market organisation, regulation and counterparties combine to create predictable, returns. That is where digital infrastructure becomes truly core.