The Economics & Business Models of Modern Data Centres

From Server Rooms to Strategic Assets

Data centres are no longer back-office assets managed by IT departments—they’re billion-dollar investments, cornerstones of national strategy, and high-yield infrastructure plays. For telcos, utilities, and sovereign investors, understanding how DCs generate revenue, absorb risk, and attract capital is no longer optional—it’s essential.

In this article, we examine how money flows through the data centre ecosystem. What are the dominant business models? Where is value created and captured? And how are sustainability, regulation, and geopolitical shifts altering the economics of the sector?

Why Data Centres Are a Magnet for Capital

In the past decade, DCs have become highly attractive to real estate investment trusts (REITs), private equity, infrastructure funds, and sovereign wealth investors.

Why?

• High and growing demand for cloud, AI, content, and edge computing

• Sticky revenue from long-term leases or hyperscaler contracts

• Hard-to-replicate assets, particularly in key metros

• Inflation hedging, as costs are often passed to tenants

• Synergies with telecom and power networks

This has led to record levels of M&A, joint ventures, and land banking—as the race for scalable, sustainable infrastructure accelerates.

Business Models: Who Makes What?

Here are the major models used to monetise DC assets:

1. Hyperscale Ownership (Build-to-Use)

Players: Amazon, Google, MicrosoftRevenue Model: Internalised, cost-optimised hosting for cloud servicesValue Levers: Economies of scale, software-driven efficiencies, captive demand

2. Colocation (Retail & Wholesale)

Players: Equinix, Telehouse, Digital RealtyRevenue Model: Customers rent space, power, and connectivityValue Levers: High-density utilisation, interconnectivity, premium location

3. Managed Services / DC-as-a-Service

Players: IBM, Atos, BT, local integratorsRevenue Model: Clients outsource infrastructure + services (monitoring, backup, security)Value Levers: Service margins, compliance add-ons, hybrid cloud orchestration

4. Telco-Owned Edge & Micro DCs

Players: AT&T, Telefónica, NTT, STCRevenue Model: Low-latency workloads, 5G integration, enterprise hostingValue Levers: Location synergy with towers/fibre, low capex footprint, differentiated latency

5. Sovereign & Public Sector Clouds

Players: National governments, cloud-neutral providersRevenue Model: Government contracts, compliance-sensitive sectorsValue Levers: Sovereignty, security, public-private investment

Pricing Mechanisms & Financial Drivers

Capex vs Opex:

• Hyperscalers favour full ownership for control and scale.

• Enterprises and governments increasingly prefer opex-heavy models via colocation or cloud.

Power as a Billing Metric:

DC services are often priced per kilowatt (kW) of power, not per square metre. For example:

• Rack space: £800–£1,500 per kW/month in Tier 1 metros

• Power usage: increasingly billed based on actual draw + tiered SLA rates

Interconnection Premiums:

Facilities with multiple network peers or cloud on-ramps can charge significant premiums for cross-connects, especially in neutral carrier hotels.

Telcos: From Passive Host to Digital Infra Player

For telecom operators, the economics of DCs have shifted from passive landlord roles to strategic infrastructure positioning.

Three big opportunities:

1. Edge Co-location – Hosting hyperscaler edge nodes at central offices or tower sites

2. Enterprise Managed Services – Bundling connectivity, hosting, and compliance for SMEs

3. Infrastructure Joint Ventures – Partnering with funds to monetise assets (e.g. Cellnex, ST Telemedia)

In emerging markets, telcos are also attractive anchor tenants for greenfield DCs, helping de-risk investment.

Utilities & Power Sector: A New Type of Customer

For grid operators and power companies, data centres are a double-edged sword.

• On one hand, DCs represent reliable, high-density, long-term demand.

• On the other, they introduce volatility, concentrated load, and pressure on grid capacity.

As such, some utilities are becoming proactive partners:

• Offering private wire or on-site generation deals (solar, hydrogen, gas peakers)

• Engaging in co-investment models or load prioritisation agreements

• Exploring flexibility and demand response schemes

Power purchase agreements (PPAs) with DCs now form a major part of many utilities' renewable portfolios.

ESG and the Economics of Sustainability

Sustainability is now an economic—not just reputational—imperative.

• Investors demand energy transparency and carbon accounting

• Tenants increasingly require low-carbon or net-zero certified hosting

• Regulatory frameworks (e.g. EU taxonomy) require proof of energy efficiency

• Power usage effectiveness (PUE) <1.3 is becoming a baseline target

The Green Premium:

Sustainable DCs can charge 10–20% higher rents than legacy facilities, especially for ESG-conscious clients.However, these sites also cost more to build—meaning ROI depends heavily on incentives, renewable access, and branding.

Risk, Redundancy & Insurance

DCs operate in a high-availability, low-failure-tolerance environment. This drives up both design complexity and cost of capital.

Factors impacting risk premiums and insurance:

• Uptime tier certification

• Location risk (e.g. flood zones, seismic activity)

• Cybersecurity posture

• Generator and cooling redundancy

• Regulatory compliance (e.g. ISO 27001, SOC 2, NIS 2 Directive)

For investors and insurers alike, understanding these variables is key to evaluating returns.

Trends in Financing and Ownership

As the market matures, ownership models are diversifying.

• Sale and leaseback deals are common, allowing hyperscalers to unlock cash

• Joint ventures between REITs and telcos/utilities de-risk projects

• Sovereign funds (e.g. GIC, ADIA) are investing for strategic value

• Private equity is driving platform roll-ups across Europe, Africa, and Asia

Bridge Connect has tracked over $70B in DC-related M&A in the past three years alone, with significant shifts in buyer profiles—from tech to infra to energy.

Strategic Questions for Decision Makers

Executives, regulators, and operators should consider:

• Should you build, buy, lease, or partner on DC infrastructure?

• How do ESG goals and energy constraints affect your DC strategy?

• Are you leaving margin on the table by outsourcing without understanding cost structures?

• How exposed are you to data sovereignty or cybersecurity regulations?

• Do your board and risk committees understand the strategic leverage DCs can provide?

The Bridge Connect View

At Bridge Connect, we help clients navigate the commercial and geopolitical implications of digital infrastructure.

• Telcos explore edge and interconnect strategies

• Investors evaluate buy/sell-side DC deals

• Power firms assess long-term energy partnerships with DCs

• Governments and regulators design digital sovereignty and resilience frameworks

Data centres may be mature—but their economics are entering a phase of structural disruption. AI workloads, sustainability demands, edge traffic, and hybrid models are all reshaping how value is created.