The digital revolution has turned connectivity into a fundamental need. What was once a luxury has become an essential public service — indispensable for economic growth, social cohesion, and innovation. From 5G networks that enable autonomous driving to artificial intelligence that supports business processes, digital infrastructure now stands alongside energy and transport as a vital foundation on which our society depends. This is the view of Jörg Spanier and Benjamin Walter from Allianz Global Investors.
The pandemic made it clear that reliable digital connectivity is not a luxury but a basic public service. Today, more and more research and analytical tasks are carried out using AI-powered tools, and people rely on artificial intelligence in their daily communication and work. Digital infrastructure forms the backbone of all these applications. Yet the quality of that infrastructure remains uneven across the world. According to a 2024 Ipsos survey, only 55% of respondents in G7 countries rated the quality of their digital infrastructure — 5G and fiber — as “good” or “fairly good.” This gap represents both a challenge and a major investment opportunity.
Behind every smartphone, every cloud platform, and every AI application lies a physical infrastructure composed of telecommunication towers, fiber-optic networks, and data centers. Together, they form the engine of the digital economy. Since the introduction of 5G in 2019, demand for telecommunication towers has surged dramatically. Networks must be densified to handle growing data volumes and to eliminate coverage gaps. Towers remain the pillars of mobile communication and offer institutional investors attractive, long-term opportunities.
The second pillar, fiber-optic networks, forms the foundation of modern connectivity. Global Internet traffic has increased more than twentyfold in the past fifteen years, yet coverage remains limited, especially in rural areas. Fiber is more energy-efficient, future-proof, and essential to meet the demands of a connected society. Allianz Global Investors actively invests in fiber projects across Europe, including XpFibre in France and Unsere Grüne Glasfaser (UGG) in Germany, both of which focus specifically on expanding access in rural regions.
The third pillar of digital infrastructure is the data center — the beating heart of the digital world. Every cloud service, AI application, and digital transaction passes through one. Without data centers, there would be no Internet, no digital communication, and no automated industry. The demand for computing power is growing exponentially due to artificial intelligence, big data, and the Internet of Things. Allianz Global Investors recently invested in Yondr, a developer and operator of hyperscale data centers in Europe and North America. These large-scale facilities require significant investment but generate long-term, predictable income streams.
Digital infrastructure combines strong growth prospects with defensive characteristics such as stable cash flows, long-term contracts, and a system-critical role in the economy. However, the sector also faces challenges — from complex regulation to high capital requirements and significant energy consumption. Finding the right partners and adhering to strict sustainability standards are crucial. Because digital infrastructure is energy-intensive, ESG criteria must be integrated from the very beginning.
Despite these challenges, the long-term outlook remains highly favorable. The ongoing expansion of cloud applications, artificial intelligence, and data-driven industries ensures sustained demand for decades to come. Digital infrastructure is the backbone of our connected world. It supports everything — from smart energy systems to telemedicine and autonomous transport. For institutional investors, it represents not only strong growth potential but also the opportunity to quite literally help build the society of tomorrow.
