DigitalBridge's Digita Oy: A $1.2B Gamble on Nordic Infrastructure's Future?

DigitalBridge Group (DBRG) is considering a potential sale of its Finnish telecom tower and data center operator, Digita Oy, seeking a valuation of up to $1.2 billion. This move underscores a broader trend of consolidation in the digital infrastructure sector, where players like DigitalBridge aim to capitalize on 5G adoption, edge computing, and data center demand. But does the $1.2 billion price tag reflect Digita Oy's true growth potential—or is it overreach in a market facing regulatory and macroeconomic headwinds?

Valuation Disputes: Growth vs. Reality

The $1.2 billion target hinges on two pillars: Finland's 5G rollout and the strategic value of Digita's data centers. The company's Finnish assets include 89,000 telecom sites, serving major Nordic operators like Telia and Elisa, while its Pasila data center in Helsinki offers 10kW-per-rack capacity. However, buyers are scrutinizing near-term risks:

• Slowing Enterprise IT Spending: A sluggish global economy has delayed enterprise investments in cloud infrastructure, tempering demand for data centers.
• Regulatory Pressure: Nordic governments are pushing to cap tower lease rates, which could compress margins.
• Overbuilding Concerns: Analysts question whether Digita's data centers are overvalued in a region where hyperscalers like Google and Microsoft already dominate.

Meanwhile, DigitalBridge's own financials paint a mixed picture. Q1 2025 results showed $90 million in fee revenue (up 24% YoY) and $35 million in Fee-Related Earnings (FRE, a 80% surge), suggesting operational resilience. Yet the company's stock trades at a discount to peers, with a GF Value of $7.49 (vs. a $16.50 analyst average target). This divergence reflects skepticism about whether Digita's valuation can hold.

Portfolio Strengths: Beyond Digita Oy

Even if the sale falters, DigitalBridge's broader portfolio offers diversified upside:
- $37.3 billion in Fee-Earning Equity Under Management (FEEUM), with a $13 billion pipeline in private credit opportunities.
- Strategic Fiber Plays: Backing ZAO's $4.5 billion acquisition of Crown Castle's fiber business expands its edge computing exposure.
- Geopolitical Stability: Nordic markets, unlike Southeast Asia or Africa, offer low trade conflict risk and strong regulatory frameworks.

Why the Sale Matters for Investors

The Digita Oy decision tests DigitalBridge's strategic discipline:
- Capital Reallocation: Proceeds from a $1.2 billion sale could fund high-growth assets or reduce debt, boosting shareholder returns.
- Market Confidence: A failed sale could spook investors, especially if the company's valuation discount widens further. Conversely, a successful sale would validate its ability to monetize non-core assets.
- Fundraising Impact: DBRG's $6.3 billion flagship fund has raised $1.2 billion YTD, but delayed LP decisions due to macro uncertainty linger. A Digita sale's success could ease fundraising pressures.

Sector Tailwinds: The Case for Digital Infrastructure

Despite near-term hurdles, 5G and data center demand remain secular growth drivers:
- Nordic 5G Adoption: Finland is a global leader in 5G penetration, with over 80% of its population covered. This supports Digita's tower portfolio.
- Climate-Resilient Data Centers: Digita's Pasila facility leverages Helsinki's cold climate for energy efficiency, a key selling point as ESG standards tighten.
- Edge Computing Surge: DigitalBridge's fiber investments position it to capture demand for low-latency infrastructure in industries like autonomous vehicles.

Investment Thesis: Hold, Wait, and Diversify

For investors, the path forward is nuanced:
1. Hold Existing Positions: DigitalBridge's FEEUM growth, robust balance sheet ($1.5 billion in corporate assets), and 15% YoY FEEUM expansion justify a hold rating.
2. Wait for a Discount: If the Digita sale drags into 2026, consider entering at a 10–15% discount to current prices.
3. Diversify Regionally: Pair DBRG exposure with Nordic infrastructure peers like Telia Company (TLS) or regional data center REITs to mitigate sector-specific risks.

Conclusion: A Risk-Adjusted Bet on Digital's Future

The $1.2 billion Digita Oy valuation is a high-stakes gamble—but one grounded in Nordic infrastructure's long-term promise. While near-term risks like regulatory caps and overbuilding loom, DigitalBridge's diversified portfolio and secular tailwinds in 5G/data center demand argue for its enduring value. Investors should stay patient: the digital infrastructure boom isn't over, and DBRG remains a key player—if it navigates this sale wisely.

Final Note: Monitor DigitalBridge's July 31 earnings call for clues on the Digita Oy process and its broader strategic priorities.