Southeast Asia’s digital infrastructure development has received backing from Abu Dhabi sovereign wealth fund ADIA with a US$500 million investment in EdgePoint Infrastructure.

ADIA has taken a minority stake in the platform, which is set to acquire, develop and operate telecommunications towers and distributed antenna systems in the region. Formed by DigitalBridge Group in 2020, EdgePoint Infrastructure has already secured more than 10,000 sites in Indonesia and Malaysia and with the SWF’s backing has ambitions for growth in other markets.

The region’s fast-growing digital economy requires growth in telecommunications towers. The pandemic highlights the importance of digital infrastructure in mitigating future crises, so operators are pushing to replace legacy low-speed broadband networks with next-generation access platforms.

In addition to towers, data centers and cloud computing are a significant and growing part of some SOIs' tech portfolios. From 2017, global investment in data centers and cloud by SOIs exceeds US$6 billion. Global SWF’s 2021 Annual Report notes that in 2020, GIC was the leading investor in this sector. Canadian pension fund OTPP has also sought to develop its exposure to data centers, having made a substantial allocation to Compass Datacenters in 2017. It led a US$360 million funding round for Singapore-based Princeton Digital Group which has built a portfolio of 18 data centers across four countries – China, Singapore, Indonesia, and India - and serves top hyperscalers, internet and cloud companies.

In October, the Asian Development Bank (ADB) called for expansion in digital infrastructure to ensure equitable access to technology, including the development of higher quality mobile broadband and affordable internet access and coverage.

At its first South-East Asia Development Symposium, ADB President Masatsugu Asakawa said, “These steps can also enhance access to basic social services such as health and education and access to financial services. These investments will better equip countries to address the worsening income inequality and disparities in opportunities brought about by the pandemic.”

With a population of 260 million, Indonesia is a significant target for investment in the digital economy, including among state-owned investors, due to the size of the market, growth in e-commerce and its specific geographical features. The fixed line network is unable to keep up with the demand of country comprised of many islands and territories, so it is turning to expanding and enhancing mobile networks to support growing smartphone access to the Internet. While robust 4G networks have been established in Java, less populous islands of Sumatra and Kalimantan are now a significant focus to boost subscribers from rural areas. Last month, Indonesia’s new sovereign wealth fund INA indicated it is set to strike a deal in digital infrastructure to bolster the Southeast Asian nation’s digital revolution and marking an expansion from core infrastructure assets.

Malaysia is also a heavily connected emerging market with eight in 10 citizens active Internet users with a high penetration rate of mobile phone use. Possessing an advanced digital technology infrastructure, the country has huge potential for growth provided infrastructure can keep up. In September 2020, the government stated that it now expects 5G networks to be launched in 2022, and will invest significantly into improving existing infrastructure.

Related funds ADIA