While digital and telecommunications infrastructure is said to have become essential to the economic success of whole industries, a large number of deals in the space are falling through – with a number of rising risks outweighing the apparent potential of its fundamentals. As a result, nearly two-thirds of investors have seen transactions relating to such infrastructure collapse in the last three years, according to a survey from S-RM.
Global private equity and M&A markets looked set to rebound in the first few months of 2025, with some hailing it as the comeback year for dealmaking. As the year has unfolded, however, investors have had to navigate an unexpectedly complex environment, leading them to temper some of that early optimism. The digital and telecoms space was no exception to this.
The infrastructure needed to make the most of the apparent potential of new technologies – from the towers and cables needed for the roll-out of 5G, and the internet of things; to the data centres which would underwrite the so-called AI revolution – has been painted as a sure bet for investors in recent times. After all, all of this was supposed to underpin the next iteration of industrial society. But after a decade of relatively benign global economic conditions, since the pandemic, established political, economic, cultural, and social norms have come under consistent pressure, marking the start of a period of profound global change.
Source: S-RM global survey of 150 investors.
Amid this, S-RM data shows that 65% of investors have seen a digital and telecoms infrastructure deal collapse in the past three years. And beyond the financial aspects of the deals, there were a large number of other risks which torpedoed acquisitions thanks to their associated issues. Chief among them was cyber security risks, cited by 60% of 150 investors S-RM polled.
This was followed by more than half of the number, who said sustainability risks and regulatory instability were to blame in the last five years. Meanwhile, third-party risk was pointed to in 47% of cases, and the spectre of geopolitical risk loomed over 41% of respondents. Looking ahead, unfortunately for the digital and telecoms space, these all look set to be the least likely to diminish in the coming period, too.
The 150 investors identified cyber risk as the most potent threat for the coming three years – with just 13% expecting it would lessen. Meanwhile, as hackers mobilise AI – and exploit weaknesses left by slapdash, rushed AI implementation exercises at the world’s largest companies. But as wars in Ukraine, Iran and others show no signs of concluding, war and security was second – with 41% expecting an increase of conflicts in the near-future.
Source: S-RM global survey of 150 investors.
Simply waiting for things to go back to ‘normal’ at this stage seems increasingly unfeasible. Investors, to that end, are looking to initiate plans that will enable them to execute strategies whether risk diminished or not.
S-RM found that 51% were now commonly using specialist consultancy support to help mitigate non-financial risks associated with the transaction process; presenting a major opportunity for advisory firms operating in the space. At the same time, 39% had taken up cyber insurance, and 35% were training their staff for certain risks. Alarmingly, however, maturity in this regard remains low, with simply re-wording agreements the most common tactic deployed by 62% of those polled.
Ian Massey, head of corporate intelligence for EMEA at S-RM, said, “Investors in Digital & Telecoms infrastructure are navigating a market where cyber risk has become a defining factor in deal success. As assets become more connected and operational technology more exposed, cyber resilience is increasingly determining whether transactions proceed, alongside broader geopolitical and regulatory pressures. With threats expected to intensify over the coming years, those who embed cyber resilience early in the investment lifecycle will be best placed to protect value and capitalise on continued demand for digital infrastructure.”
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