Why digital infrastructure could emerge stronger from Covid-19
The Covid-19 pandemic has accelerated the need to modernise digital infrastructure networks. We expect that this will create new investment opportunities.
Online activity has surged during the coronavirus pandemic
Whether we like it or not, the Covid-19 pandemic has cemented our addiction to fast and reliable internet access. While speaking to colleagues remotely, food shopping online or monitoring our ‘smart home’ devices, a dropped Wi-Fi connection triggers a red alert in most households. Incumbent broadband providers have unfortunately experienced a rise in connection issues as online activity has surged during lockdown.

On a more positive note, cloud-based platforms such as Amazon, Zoom, Netflix and Ocado have risen to this challenge, having invested heavily in scalable digital infrastructure before the pandemic, in the form of software platforms and computer servers. This infrastructure enables them to securely process our orders, optimise logistics routes and deliver content on demand.
Having now experienced this potential, we believe their customers are unlikely to want less convenient ways of working, living and playing in the future. This means an accelerating need to modernise the digital communications networks that connect us to them.
Mission critical infrastructure
Data centres play a mission critical role for their occupiers and have demonstrated extreme income resilience during the pandemic, with high rent collection and low levels of bad debts. They enable cloud-based services such as Netflix by housing computer servers and offering access to internet exchanges that transmit data to subscribers who stream their content. What is less visible is that these data centres and exchanges rely on a largely hidden external network of millions of fibre optic cable miles, cellular base stations, towers and countless signal transmitters.

These networks are also critical for emergency responders, military communications and any other service that offers data access outside of a private local network. This includes Fifth Generation (5G) cellular technology that promises to accelerate mobile download speeds by up to 100x compared to those offered by Fourth Generation (4G) technology.

5G should enable emerging bandwidth-hungry technologies - such as driverless cars, online gaming and smart factories - to operate smoothly. The evolving network architecture and our ever-increasing reliance on network access has made it clear to governments that they must invest heavily to remain globally competitive.
Stimulating an economic recovery through digital infrastructure
China’s announcement of a $1.4 trillion stimulus package shifted focus from traditional infrastructure, such as roads and bridges, towards new infrastructure for the digital age. It is likely to target investments in artificial intelligence, data centres, 5G base stations, ultra-high voltage power, electric vehicle charging, industrial internet of things and intercity transit.
China is already comfortably leading the world in mobile wireless coverage, hosting around 2 million active cellular towers. This is 1.5x the rest of the global industry combined, according to data from TowerExchange.
Similarly, the EU is prioritising digitisation as part of its €750bn Covid-19 stimulus package. We believe that digital infrastructure will remain firmly at the centre of the debate, as economies recover from the pandemic.
Global cities host the most valuable digital infrastructure
It is clear to us that high quality digital infrastructure in the world’s leading cities is becoming increasingly valuable as it sits at ‘the edge’ of the network, close to high volumes of customers and data. This proximity offers users the lowest levels of latency, thereby improving customer experience and reinforcing demand.

A key feature of 5G is that the radio wavelengths used can transmit significantly more data, but over much shorter distances. This means signal transmitters need to be more densely packed to ensure full coverage. A lot more fibre optic cable, cellular towers and small cells are therefore required than for 4G signal, which travels further.

To justify this investment, mobile network operators (MNOs) will first target cities with large populations of affluent consumers and businesses, where the potential 5G service revenue opportunity is larger. In turn, these cities will experience the highest quality of signal coverage, thereby reinforcing their productivity advantage.
Who will control 5G infrastructure?
Like data centre occupiers, the MNOs that use towers to transmit data are realising that it makes financial sense to share space on them with their competitors. The costs of deploying 5G transmission equipment and the time that it takes to densify tower portfolios make going it alone an unlikely route to scale their network rapidly.

MNOs in the US realised this some time ago, leading to a large and consolidated ‘carrier neutral’ tower, small cell and fibre industry, dominated by companies such as American Tower. Outsourcing in Europe and Asia is also gathering pace with Cellnex and China Tower raising billions of dollars in the public markets to extend their local leadership. These infrastructure owners then benefit from long-term, predictable lease payments from the MNOs which will operate the 5G network.
Essential role in promoting future economic growth
Digital infrastructure is a rapidly evolving yet often overlooked asset class, backed by resilient income streams. We think it has an essential role to play in promoting future economic growth, with cities that under-invest likely to lose global competitiveness.

Misguided attacks on cell towers have highlighted the challenges involved in the roll-out of new technologies. In addition to such ESG risks, investors in this sector need to pay close attention to technological advances, such as quantum computing, which could disrupt traditional models. Investors able to navigate these changes uncover some very interesting opportunities.
This article has been prepared by AHAM Asset Management Berhad (formerly known as Affin Hwang Asset Management Berhad) (hereinafter referred to as “AHAM Capital”) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to AHAM Capital and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of AHAM Capital. The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or opinions that are believed to be correct at the time the presentation was prepared,AHAM Capital makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions. As with any forms of financial products, the financial product mentioned herein (if any) carries with it various risks. Although attempts have been made to disclose all possible risks involved, the financial product may still be subject to inherent risk that may arise beyond our reasonable contemplation. The financial product may be wholly unsuited for you, if you are adverse to the risk arising out of and/or in connection with the financial product. AHAM Capital is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessments of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers. AHAM Capital and its affiliates may act as a principal and agent in any transaction contemplated by this presentation, or any other transaction connected with any such transaction, and may as a result earn brokerage, commission or other income. Nothing in this presentation is intended to be, or should be construed as an offer to buy or sell, or invitation to subscribe for, any securities. Neither AHAM Capital nor any of its directors, employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (expressed or implied) arising out of, contained in or derived from or any omission from this presentation, except liability under statute that cannot be excluded.


A copy of the Prospectus and Product Highlights Sheet ("PHS") can be obtained at AHAM Asset Management Berhad's sales offices or at aham.com.my. Investors are advised to read and understand the contents of Affin Hwang Aiiman Global Multi Thematic Fund’s (or the “Fund”) Prospectus dated 12th August 2021 and corresponding PHS before investing. There are fees and charges involved when investing in the Fund. Investors are advised to consider and compare the fees and charges as well as the risks carefully before investing. Investors should make their own assessment of the risks involved in investing and should seek professional advice, where necessary. The price of units and distribution payable, if any, may go down as well as up and the past performance of the Fund should not be taken as indicative of its future performance. The Securities Commission Malaysia has not reviewed this marketing/promotional material and takes no responsibilities for the contents of this marketing/promotional material and expressly disclaims all liability, however arising from this marketing/promotional material.

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Managing Director
Teng Chee Wai is the founder of Affin Hwang Asset Management Berhad (Affin Hwang AM). Over the past decade, he has built the Company to be the fastest growing and only independent investment management house in Malaysia’s top three, with an excess of RM47 billion in assets under management as at 31 December 2018.​

​In his capacity as Managing Director / Executive Director, Teng manages the overall business and strategic direction as well as the management of the investment team. His hands-on approach sees him actively involved in investments, product development and marketing. Teng’s critical leadership and regular participation in reviewing and assessing strategies and performance has been pivotal in allowing the Company to successfully navigate the economically turbulent decade.

Teng’s investment management experience spans more than 20 years, and his key area of expertise is in managing absolute return mandates for insurance assets and investment-linked funds in both Singapore and Malaysia. Prior to his current appointments, he was the Assistant General Manager (Investment) of Overseas Assurance Corporation (OAC) and was responsible for the investment function of the Group Overseas Assurance Corporation Ltd.​

​Teng began his career in the financial industry as an Investment Manager with NTUC Income, Singapore. He is a Bachelor of Science graduate from the National University of Singapore and has a Post-Graduate Diploma in Actuarial Studies from City University in London.
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