Digital Infrastructure in Emerging Markets

The Asset You Cannot See

There is a reason this category is persistently underowned by private investors, and I think it is essentially psychological. A port is visible. A toll road is visible. A tower block is visible. A fibre optic cable buried under a highway in Ogun State, or a subsea trunk running along the seabed off the Kenyan coast, is not. Nobody drives past it and thinks about ownership.

Yet in my assessment, this invisible layer is currently producing some of the most attractive risk adjusted infrastructure returns available anywhere in the emerging world. It is contracted, it is dollar linked in many structures, it carries long duration, and it is being financed by a coalition of development finance institutions, sovereign funds and private capital that is unusually well aligned.

I want to explain why the capital is moving, where specifically it is going, and what an internationally minded investor should understand before following it.

Capital Is Migrating Because Mature Markets Have Run Into Physical Limits

The migration is not primarily a story about emerging market optimism. It is a story about constraints in developed markets.

The established digital hubs of the United States, Europe and East Asia are running into hard ceilings: grid interconnection queues measured in years, permitting cycles that have lengthened considerably, land scarcity in the metros that matter, and increasingly, local political resistance. The International Energy Agency projects that global data centre electricity consumption will more than double by 2030, approaching 945 terawatt hours. That demand has to be sited somewhere, and the traditional locations cannot absorb it.

Singapore's moratorium on new data centre development is the clearest single illustration. A market that had established itself as Southeast Asia's connectivity capital effectively closed its front door, and the consequence was immediate: demand redistributed to Malaysia, Thailand, Vietnam and Indonesia, several of which responded by creating special economic zones with streamlined permitting and dedicated power allocation.

What emerging markets offer in this equation is not merely lower cost. It is available land, faster approval cycles, stranded or underutilised generation capacity, strong renewable potential, and accelerating domestic demand. That combination is genuinely scarce, and scarcity is what creates pricing power.

The Stack, and Why Investors Should Not Treat It as One Thing

I encourage clients to disaggregate this category into three layers, because they behave very differently.

Layer One: Subsea and International Connectivity

This is the trunk of the system. The 2Africa submarine cable system, running roughly 45,000 kilometres with designed capacity up to 180 terabits per second, has been reaching completion through the first half of 2026. Ongoing subsea investment linking Brazil to North America, Europe and Africa is what underpins São Paulo's position as Latin America's connectivity hub.

Subsea assets are typically consortium owned, capital intensive, and extremely long lived. They are difficult for individual investors to access directly, but they are the precondition for everything above them. When I evaluate a national digital infrastructure opportunity, my first question is always about international capacity, because a data centre in a country with thin subsea connectivity is a warehouse with a narrow door.

Layer Two: Terrestrial Backbone and Last Mile Fibre

This is where I see the most compelling development stories, and Nigeria offers the cleanest example available.

In April 2026 the African Development Bank approved a $200 million loan supporting Nigeria's D-VIBE digital infrastructure project. The programme, financed at approximately $2 billion in total, plans to deploy roughly 90,000 kilometres of new open access fibre, expanding the national backbone from about 30,000 kilometres to 120,000 kilometres and reaching all 774 local government areas. The stated objective is to lift broadband penetration from around 45 percent to approximately 70 percent.

Consider what that means economically. Broadband penetration is not a vanity metric; it is the denominator for every digital revenue stream in the country. Every payments business, lending platform, logistics network and streaming service in Nigeria is constrained by it. A programme that moves penetration from 45 to 70 percent expands the addressable market for an entire national digital economy simultaneously.

Kenya is pursuing a parallel logic, committing roughly 40 billion Kenyan shillings toward an objective of information and communications technology contributing 10 percent of gross domestic product by 2030.

The "open access" structure in these programmes matters more than most investors register. Open access networks wholesale capacity to multiple operators rather than serving a single vertically integrated carrier. That converts the asset from a competitive telecoms business into something much closer to a regulated utility, with diversified offtake and lower commercial risk.

Layer Three: Data Centres and Edge Capacity

This is the layer attracting the most private capital, and the numbers are striking.

Querétaro in Mexico has become the fastest growing data centre market in Latin America, with inventory surging by over 450 percent year over year in a single quarter to roughly 298 megawatts, driven by a small number of large hyperscale and AI deployments. Available supply reached about 31.5 megawatts against a vacancy rate near 10.6 percent, indicating substantial pre leasing. Its position inside Mexico's industrial belt, close to fibre routes running north, ties it directly to the nearshoring reallocation of North American manufacturing.

São Paulo remains the region's established anchor, with wholesale inventory up roughly 8.9 percent year over year to about 536.7 megawatts and quarterly absorption near 39.2 megawatts, driven by hyperscale cloud expansion.

In Asia, the transaction that told me most about institutional conviction was Bain Capital's process to sell a controlling stake in Bridge Data Centres at a reported valuation around $5 billion. That is a private equity firm crystallising value in a platform built specifically across Southeast Asia and India. Mature exit pricing in emerging market digital infrastructure is a relatively new phenomenon, and it materially changes the risk calculus for investors who previously worried about liquidity.

Why I Classify This as Infrastructure Rather Than Technology

This distinction determines how the allocation should be sized and where it belongs in a portfolio, so I want to be precise.

Technology investments are underwritten on growth, market share and innovation, and they can be disrupted. Infrastructure investments are underwritten on contracted cash flow, asset life and replacement cost, and they are typically protected by the difficulty of building an alternative.

Emerging market digital infrastructure sits firmly in the second category when it is structured well. Hyperscaler leases run long. Wholesale fibre contracts run long. Revenue is frequently denominated in or linked to hard currency, which addresses the concern I hear most often from clients contemplating frontier exposure. Replacement cost is high and rising, because trenching fibre and securing grid interconnection does not become cheaper with time.

There is also a financial deepening argument that I find persuasive. Credit penetration in much of Africa and Southeast Asia remains below 50 percent of gross domestic product. Digital infrastructure is the physical precondition for closing that gap, which means investors in this layer are positioned upstream of the entire financial inclusion story rather than competing within it.

The Risks I Will Not Minimise

I would not be doing my job if I presented this as uncomplicated.

Power reliability is the binding constraint. A data centre is a machine for converting electricity into computation. In markets where grid reliability is inconsistent, the effective cost of capacity includes redundant generation, and that changes the economics considerably. I examine the power solution before I examine the tenancy schedule.

Currency mismatch can destroy an otherwise sound asset. Local currency revenue against hard currency debt has ended more emerging market infrastructure investments than any operational failure. I look for hard currency contracted revenue or a genuine natural hedge, and I discount heavily where neither exists.

Data sovereignty regulation cuts both ways. Localisation requirements create demand for in country capacity, which is favourable. They can equally restrict cross border traffic in ways that undermine a regional hub thesis. This is a policy risk that requires monitoring rather than a one time assessment.

Offtake concentration is the quiet risk. A facility substantially pre leased to one hyperscaler is exposed to that tenant's capital allocation decisions, which are made in another hemisphere for reasons unrelated to the host market.

How Investors Can Actually Participate

Access is the practical obstacle, and it is improving.

Listed regional operators in tower, fibre and data centre businesses across India, Southeast Asia, Latin America and Africa offer direct exposure with public market liquidity, though often with concentrated country risk.

Global digital infrastructure funds provide diversified exposure, but many carry substantial developed market weight. Read the geographic breakdown rather than assuming the label.

Development finance institution co-investment and blended finance structures deserve serious attention from qualified investors. When the International Finance Corporation or the African Development Bank participates in a transaction, it brings more than capital: it brings political risk mitigation, governance standards and a degree of regulatory insulation that private capital cannot easily buy. I regard DFI participation as one of the more reliable quality signals available in frontier infrastructure.

Private credit into these projects has become an increasingly interesting route, offering contractual seniority and yield without equity development risk, which suits many of the family office and high net worth clients I work with.

The Diligence Framework I Apply

When a specific opportunity reaches my desk, whether a listed operator or a private placement, I work through the same sequence. I offer it here because I think it is more useful than any list of recommended markets.

Start with the electron, not the building. What is the power source, what is the contracted tariff, what happens in an outage, and who bears the cost of redundancy? In several African and South Asian markets, the answer to this question alone eliminates the majority of proposals.

Then the capacity in and out. How many independent international routes reach this facility? Single route dependency in a country with one subsea landing is a concentration risk disguised as a national infrastructure asset.

Then the offtake. Who signs, for how long, in what currency, and with what termination rights? I want to read the lease, not the summary of the lease.

Then the regulatory posture. Is there a data localisation framework, is it stable, and does the government treat digital infrastructure as strategic national capacity or as a taxable foreign business? Those two attitudes produce very different outcomes over a decade.

Finally, the exit. Bain Capital's process on Bridge Data Centres matters to me less as a valuation reference and more as evidence that an exit path exists at institutional scale. In frontier infrastructure, a demonstrated exit is worth more than an attractive entry.

Sizing the Allocation

For a globally diversified portfolio with genuine emerging market appetite, I generally regard 3 to 7 percent in emerging market digital infrastructure as reasonable, funded partly from general emerging market equity exposure rather than from the technology allocation. The distinction matters: this is not a technology bet expressed through geography, it is an infrastructure allocation that happens to be digital.

I would add one further point on time horizon. These are five to ten year assets at minimum. Investors who cannot commit for that period should not participate, because the liquidity in the private structures is limited and the listed proxies are volatile enough to punish short holding periods.

Closing Thought

Every generation of infrastructure investors has been rewarded for owning the layer beneath the visible economy. In the nineteenth century it was rail. In the twentieth it was ports, grids and pipelines. The pattern is always the same: unglamorous assets, long build periods, sceptical early observers, and decades of utility economics for those who stayed.

What is being trenched, laid and energised across Africa, South Asia, Southeast Asia and Latin America right now belongs in that lineage. The wealth it creates will be invisible for some years, and then it will be obvious, and by the time it is obvious the entry prices will reflect it.

I would rather my clients be early and patient than late and certain.