In focus

Nervous systems: How the world found out it depends on digital infrastructure

It is not an exaggeration to say that digital infrastructure kept the world’s economy running through the Covid-19 pandemic.

Life certainly looked very different as shops, restaurants, bars and gyms shut their doors, and the hospitality and retail sectors were especially hard-hit by job losses. According to the BBC, “Since the early days of the crisis last March, 813,000 [UK] payroll jobs have disappeared, including 355,000 in hotels, restaurants and pubs, and 171,000 in shops.”

But ultimately the economic impact was not as severe as feared. For those of us fortunate enough to keep working through the lock-downs, remote work technology played a huge part. Virtual conferences allowed business meetings and even medical consultations to go ahead. Students who could not get to classes could continue to learn through online tutorials. Online shopping boomed. In 2020, it is estimated that almost 15% of all retail sales in the EU were generated online, a rise of over 50% versus 2019.

Without robust digital infrastructure, none of it would have functioned at all. Leading up to the pandemic, OECD data already pointed to a correlation between broadband penetration and economic output. The impact of the virus has cemented the view that digital infrastructure is key to economic resilience and competitive growth. Despite this, the UK has one of the lowest fibre broadband connection rates in Europe.


The UK government has taken note, acutely aware that an upgraded digital network will be necessary for the economy to fulfil its potential. According to the UK Parliament website;

“Although superfast broadband is sufficient for most household needs today, the demand for data-intensive services such as online video streaming is increasing and can push the limits of a superfast broadband connection. The coronavirus pandemic has further highlighted the need for widely available and reliable digital connectivity.”

The government push for fibre deployment is also substantiated by skyrocketing demand for data. Compound annual growth for higher bandwidth connections is currently expected to be 40% between 2017 and 2022.

The intention is to deliver the next generation of broadband – gigabit-capable – to 85% of UK households by 2025, from 27% today. Gigabit-capable broadband means download speeds of at least one gigabit per second. Crucially, government policy is that this infrastructure will be mostly built using private investment.

Indeed, of the total announced £600 billion of infrastructure projects announced by the current government for development over the next five years, the Financial Times recently stated that half are to be financed by the private sector.

How can investors hack into the growth?

Infrastructure debt is directly plugged into this expansion potential. The overarching characteristics of infrastructure remain in place; being less cyclically exposed and exhibiting low correlation to most traditional asset classes.

However, infrastructure debt also allows investors to go beyond thematic engagement to support specific projects, actually delivering on key infrastructure goals of the coming decade and beyond.

By way of example, our team recently completed an investment in a niche operator of fibre to the home (“FTTH”) networks in primary cities across the UK.

The company is positioned on the last-mile network. It deploys, owns and operates the wiring and the associated active equipment in large buildings and it then offers retail internet services exclusively on its infrastructure.

The company has already connected close to 500,000 of homes to fibre and has the ambition to connect a further 1.3 million homes in the next five years.

Valuable portfolio tool and essential investment

Infrastructure debt lets investors directly contribute to improving the rollout of essential fibre and 5G capacity, the two key themes in the telecoms space at the moment. Coupled with the asset class’ risk-return profile, investors can gain meaningful diversification and resilient returns while boosting vital economic development.


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