Digital Infrastructure Opportunities in European Secondary Markets: An Overview

Cordiant Digital Infrastructure Limited (CORD) has carved out a distinctive investment approach in the European digital infrastructure landscape. CORD’s investment thesis is based on a forward-thinking perspective to unlock value in underserved, attractive secondary markets.

Digital infrastructure – largely encompassing communication towers, data centres, and fibre networks – has developed into the third-largest global infrastructure category in recent years. These assets and businesses have become a distinct “core” and “core +” asset class for equity investors as they exhibit classic infrastructure characteristics: ‘hard assets’ with long-term, often inflation adjusted contracts, blue chip customers, and high margins, and strong predictable free cash flow (with high cash conversion) now supplemented with attractive growth dynamics.

In the race to capitalise on Europe’s digital transformation, institutional investors have, so far, predominantly gravitated towards the continent’s premier technology hubs: Frankfurt, London, Amsterdam, Paris, and Dublin (the so-called FLAP-D club of demand centres). Yet behind this stampede for assets in prime geographies, opportunities have emerged in carefully selected secondary markets that offer superior entry multiples and operational headroom for accretive growth investment and value creation.

Since inception, CORD has focused on attractive digital infrastructure businesses (those with protective moats and vital to digitisation) in Europe where it can apply insight and deploy its “Buy, Build and Grow” strategy that stresses buying well and developing these critical businesses. A key element of this strategy has been the factoring in of pricing inefficiencies in underserved markets, looking outside saturated metropolitan centres combined with the opportunity to grow companies into national and/or regional champions.

Beyond mere geographical diversification, CORD’s initial pivot toward secondary markets capitalizes on three distinct arbitrage opportunities: entry value differentials relative to saturated FLAP-D markets (where intense competition has compressed yields); operational inefficiencies in markets with strong fundamentals and growing digital potential; and leveraging EU digital transformation requirements across markets. This approach has been validated through strategic acquisitions in some of Europe’s fastest-growing economies over the past two decades.

“We’re seeing a fundamental shift in how value is created in digital infrastructure”, says David Kippen, Managing Director at Cordiant Capital, Investment Manager to CORD. “While primary markets suffer from yield compression due to intense competition, secondary markets offer similar positive fundamentals with more attractive entry multiples and higher growth trajectories. The emergence of hybrid cloud computing and the computational demands of generative AI, coupled with constraints in green power capacity, have reshaped both the geographic and technical parameters of the sector”.  

This dynamic has been equally evident in Central and Eastern European markets, where the convergence of industrial legacy infrastructure, technical talent depth, and EU-mandated digital transformation initiatives have created unique investment opportunities. Two markets in particular – Czechia and Poland – serve as compelling case studies for this thesis. Through initial acquisitions of Emitel in Poland, and CRA in Czechia, CORD has demonstrated the ability to extract value through both organic growth initiatives and targeted consolidation in secondary markets.

Czechia: Capitalising on Digital Transformation Momentum

Czechia represents an archetypal example of the secondary market opportunity. The country’s digital economy has demonstrated remarkable vitality, posting a ca.10% CAGR (2019-2021).[1] This growth trajectory is underpinned by several structural advantages:

• – Strategic geographic positioning facilitating low-latency service delivery across the continent;
• – Robust power infrastructure with competitive pricing relative to Western European markets;
• – Deep technical talent pool, particularly in STEM fields; and
• – Advanced manufacturing base driving demand for enterprise cloud, edge computing and IoT applications.

Consistent with CORD’s “Buy, Build, and Grow” philosophy, and the Company’s first acquisition, CRA illustrates an evolution from traditional infrastructure operator to integrated digital services platform now providing leading Broadcast, MNO and backhaul transmission services, with rapid enhancement by way of its growing complementary data centre business together with its acquisition of Cloud4com (leading Czech cloud services business) and DC Lužice.  The company’s progress in the development of a state-of-the-art data centre in Zbraslav not only underscores CRA’s growth, but Czechia’s emergence as a digital hub. With automation potential encompassing workplace activities, coupled with sophisticated STEM capabilities and manufacturing expertise, Czechia offers substantial digital infrastructure growth runway. Industry analysts project the edge computing market will witness growth at a significant CAGR of around 35% from 2024 to 2030.[2] In Czechia, this is supported by a projected GDP expansion of 2.8% (2025), buttressed by €1.94 billion of funding dedicated to digital initiatives, supporting continued sector momentum.[3]

Poland: Fastest GDP Growth per capita in Europe since 2000

Poland presents an equally compelling investment case, characterised by the confluence of market scale and digital growth potential. The country’s Very-High Capacity Network (VHCN) coverage of 81.1% households already exceeds EU averages, yet significant expansion potential remains, supported by:

• – €12.4 billion digital transformation allocation (1.6% of GDP);
• – Projected GDP growth of 3.4% in 2025;
• – Digital economy forecast to reach $133 billion by 2030; and
• – Mandatory universal fibre coverage targets by 2030.[4]

Poland has become the largest telecommunications market in Central Europe, and ongoing 5G implementation requires a dense network infrastructure, making additional towers and deployments crucial for coverage. As the primary and most cost-efficient distributor of local language programming to a regionally disperse population, broadcasting is expected to remain a core pillar in Poland for the long-term. Since CORD’s acquisition, Emitel has continuously expanded its services in broadcast, signed new contracts with 10-year terms, and built and acquired additional MNO towers. The accretive acquisition of American Tower’s Polish assets illustrates the potential for operational leverage while capturing Poland’s digital expansion. Like CRA, Emitel is a broad integrated infrastructure operator with a platform to continue to realize synergies from integrating towers, backhaul and potentially, data centres.

The Irish Precedent: A Secondary Market Turned Leader

Ireland’s transformation from peripheral economy to digital powerhouse serves as a blueprint for secondary market potential. Anchored by prescient investments in telecommunications infrastructure during the late 1970s, this transformation has delivered sustained, OECD-leading growth rates – a remarkable pivot that has propelled the country into the elite circle of the world’s 15 most prosperous nations, measured by per capita GDP.

Arguably the first “secondary” market to seize upon the digital opportunity, Ireland’s adoption of the sector has culminated in a sophisticated digital ecosystem. The late joiner to the FLAP-D markets, Ireland has 78.5% Fibre to the Premises (FTTP) penetration—materially exceeding the EU’s 64% benchmark.[5] The €5.6 billion public allocation to deliver its Digital Decade objectives by 2030 provides continued policy support for digital infrastructure expansion. While headline GDP contracted 5.5% in 2023 (with impact of global rate increases, and a slowdown in multinational activity, as well as a reset against post Covid high growth rates in prior years), the Information & Communication sector’s 7.4% growth demonstrates the defensive characteristics of digital infrastructure, and its continued centrality to Ireland’s economic development.[6]

Ireland therefore demonstrates how strategic infrastructure investment can catalyse broader economic transformation, and CORD’s €190.5 million Speed Fibre Group acquisition exemplifies the opportunity set in this kind of market: operational optimisation of service provision and strategic network build out. With an expansive fibre and wireless backhaul infrastructure, and the continued build-out of backbone fibre networks and the Metropolitan Area Networks (MANs), Speed Fibre is able to meet the increasing demand for high-speed digital services while taking advantage of the macroeconomic trends and GDP drivers in the country.

A Replicable Framework

The experiences in Czechia, Poland, and Ireland illustrate several key investment considerations for digital infrastructure allocators:

• – Maintaining focus on markets positioned at the optimal inflection point between initial digital transformation and full maturation of the infrastructure ecosystem offers significant opportunities with entry timing being critical;
• – Operational expertise and local market knowledge are essential for sophisticated market selection criteria;
• – EU digital transformation initiatives provide policy support and funding visibility; and
• – Platform consolidation opportunities can drive significant additional value creation.

As the EU’s Digital Decade strategy drives infrastructure investment across member states, secondary markets continue to offer compelling value creation opportunities, with the key to success being disciplined execution. “Local knowledge and operational expertise are critical. The winners will be those who can navigate local regulatory environments while implementing best-in-class operational practices” says Kippen. “CORD’s portfolio shows the ability to unlock organic expansion and growth within the sector is rooted in careful market selection, strong local partnerships, and a team with deep specialist knowledge and operational insight”.

For institutional investors seeking exposure to digital infrastructure, these markets offer an attractive combination of yield and growth characteristics while maintaining exposure to Europe’s continuing digital transformation. The key differentiator for success will be the ability to identify markets at the optimal point in their development trajectory and execute value-creation strategies effectively.

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[1] McKinsey & Company, ‘Digital challengers on the next frontier: Perspective on the Czech Republic within Central and Eastern Europe’, 2022

[2] Grand View Research, Edge Computing Market Size Forecast

[3] European Commission, ‘2024 Digital Decade Country Report’, 2024

[4] European Commission, Poland 2024 Digital Decade Country Report, 2024

[5] European Commission, Ireland 2024 Digital Decade Country Report, 2024

[6] Central Statistics Office Ireland, 2024