Today, we believe one standout area that happens to tick every box is telecommunication (telecom) towers.
Key questions to ask
When it comes to assessing the investment viability of different infrastructure assets, one possible framework of analysis remains the same – built on the following six questions:
Ticking all the boxes
Infrastructure assets usually require significant upfront investments but incur low ongoing costs. Importantly, they can also increase revenue with minimal additional expense. Therefore, we believe the standout in this category, along with answering all the questions above, is telecom towers. A sector that benefits from strong structural demand growth.
This is evident in the widespread use of mobile devices around the world and the significant increase in data consumption. A typical person’s data use has risen from five gigabytes (GB) per month in 2018 to 20 GB per month in 2023, with an expected increase to 50 GB per month by 2028 – a tenfold rise over the decade.1
Tenants are the key …
The real investment appeal of telecom towers is connected to their return profile as they add new telecom tenants to the same tower site, also known as colocation.
Investment returns improve significantly when additional companies join a tower (Figure 1). This is because the marginal costs for tower operators are minimal due to these companies essentially using their own equipment, but the positive revenue impact is significant.
Figure 1. Value creation from telecommunication tower colocation
… and tenancy rates are growing
The good news for tower companies is that tenancy rates are growing. The primary driver is that telecommunications companies are increasingly choosing to partner with independent tower companies rather than building and owning their own tower infrastructure.
Further, rather than investing capital in their own tower infrastructure, many telecom companies have been selling their existing towers. Independent tower companies, for their part, have been able to improve their value proposition by servicing multiple telcos.
While the trend of telecom transitioning to independent tower providers is most pronounced in North America and Europe, it’s very much a global trend (Chart 1).
Chart 1. Tower ownership by region
Where the opportunities may lie
We believe areas of opportunity lie in Asia and Africa, where the transition to independent tower companies has the longest way to go in these two regions (Chart 1). In Africa, we are currently seeing rapid data consumption, driven by population growth, increased mobile phone usage, more affordable data plans, and expanding internet infrastructure. While the number of internet users has doubled in the last five years, we believe that there is still ample room for growth. For example, internet penetration in Nigeria is just 46% compared with the OECD average of 87%.2,3
Final thoughts
We believe telecom towers stand out as a compelling asset class for infrastructure equity investors seeking resilient, long-duration assets with strong fundamentals. Their essential role in enabling digital connectivity ensures consistent demand, while long-term contracts and inflation-linked revenues have provided predictable cash flows and mitigation of macroeconomic volatility risk. As data consumption accelerates and 5G deployment expands globally, we believe tower assets are well-positioned to benefit from secular growth trends. For investors aiming to balance stability with growth in their infrastructure portfolios, telecom towers offer a compelling blend of defensive characteristics and forward-looking potential.
Endnotes
1 Aberdeen, Statista, August 2025.
2 Statista, January 2024.
3 DataReportal, March 2025.
Important information
Projections are offered as opinion and are not reflective of potential performance. Projections are not guaranteed and actual events or results may differ materially.
Past performance is no indication of future results.
Products investing in infrastructure are subject to the risk of concentrating investments in infrastructure-related companies, which makes them more susceptible to factors adversely affecting issuers within that industry than would a product investing in a more diversified portfolio of securities. These risks include high interest costs in connection with capital construction programs and the costs associated with environmental and other regulations.
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