Beyond the Fund: Private Equity’s Next Frontier in Digital Infrastructure

Private equity is increasingly concentrating capital on digital infrastructure — the essential backbone of today’s economy. Investments are accelerating into fiber networks, hyperscale data centers, and edge computing facilities, reflecting the sector’s critical role in enabling cloud adoption, AI, and next-generation connectivity.

These assets are among the most demanding in the market: highly capital intensive, operationally complex, and requiring flawless execution at scale. Success hinges on speed, reliability, and the ability to build platforms that can scale efficiently while meeting ever-growing demand for bandwidth and compute power.

Digital Infrastructure's Rise in PE

The pivot toward technology-driven investing is unmistakable.

Just a decade ago, PE deals were dominated by software and business services. Today, capital is flowing heavily into critical infrastructure: fiber networks, data centers, edge compute, and power assets that support digital scale.

The underlying reasons are clear: AI, cloud adoption, and cybersecurity are fueling demand for a more reliable digital backbone – an infrastructure that requires enormous capital, relentless execution, and leaders who can deliver under pressure.

• In early 2025, Macquarie Asset Management announced major capital injections into both Applied Digital and Aligned Data Centers to support growth in AI and HPC infrastructure.
• This year, Gigapower, the AT&T | BlackRock open-access fiber JV, expanded its footprint across six states, bringing multi-gig fiber to new communities and preparing for additional ISP participation.
• On the power side, BlackRock’s infrastructure arm is in advanced talks to acquire AES Corp. in a ~$38 billion (including debt) deal, a signal that control over utility and energy assets is increasingly seen as critical infrastructure to support the digital economy.

Capital Without People Is Just a Check

Deploying billions into infrastructure is one thing, but driving execution and returns is another.

If there’s one reality infrastructure investors understand, it’s this: money builds projects, but people deliver returns. The easy part is writing the check, and the challenge is finding leaders who can scale, execute, and get things done.

What separates the winners in this sector isn’t vision alone, but operational muscle. Firms need executives who can:

• Scale teams through the chaos of hypergrowth.
• Manage capital-intensive builds with discipline.
• Translate infrastructure assets into consistent, revenue-generating platforms.

These aren’t abstract leadership traits. They determine whether a network expansion becomes cash-flow positive or collapses under delays, overruns, and sponsor frustration.

Consolidation: The Next 6-18 Months Will Be Defining

Scale and M&A are already reshaping the fiber-to-the-home landscape.

• Metronet’s acquisition by a KKR | T-Mobile joint venture closed in July 2025, valued at around $4.9B for a 50% stake and full control of residential operations. Today, Metronet serves more than 2M homes across 17 states and is targeting 6.5M homes by 2030.
• Lumos was acquired by T-Mobile, positioning themselves as an anchor tenant in a fiber JV. Meanwhile, AT&T is acquiring Lumen’s Mass Markets (residential fiber business, ~1M customers and 4M passings) for $5.75B, with plans to spin the assets into a NetworkCo and bring in a private equity partner within 6-12 months.

This kind of consolidation is only accelerating. Expect more deals in the next 6–18 months, particularly in rural and underserved markets where BEAD subsidies are unlocking opportunity, but where power and space constraints still make execution difficult.

Data centers are following a parallel path. With AI workloads driving compute closer to the edge, mid-sized players will become prime targets. Investors who recognize the convergence of fiber and data center strategies, and have leadership teams ready to execute across both, will dominate.

Policy: Catalyst, Not Constraint

Subsidies like BEAD are forcing investors to tackle hard problems:

• Expanding access in underserved regions.
• Meeting rising power and cooling demands.
• Designing infrastructure that's AI-ready from the ground up.

Firms that treat policy as a growth catalyst will move faster, secure funding, and create stickier, long-term revenue streams.

The TEG Consulting POV: Three Elements That Matter

Here’s where we see investors winning:

• Investor Commitment Is Foundational. Winning infrastructure bets start with a fully funded business plan, strong equity support, and thoughtful capital structuring (e.g. asset-backed securitization) so projects aren’t overly dependent on future infusions or execution risk.
• Talent Is the Differentiator. Two or three transformative executives can change the trajectory of a fiber build or data center rollout. They are the force multipliers.
• Platform Thinking Wins. Success lies in building scalable, repeatable infrastructure models, not one-off projects.

Private equity has always been about creating value, but in digital infrastructure, that value isn’t created in spreadsheets or deal rooms, it’s created on the ground: in trenches, on rooftops, inside server halls. And it’s unlocked by leadership capable of turning massive capital commitments into long-lasting businesses.