Carrier-Neutral Network Operators: 2Q19 Market Review

Carrier-Neutral Network Operators: 2Q19 Market Review
CNNOs now operate 624 data centers, 2.4 million cell towers, and over 542K route miles of fiber
By Arun Menon

Description

This is MTN Consulting’s comprehensive, Excel-based assessment of the Carrier-Neutral Network Operator (CNNO) market sector, including detailed financial & operational results from 2011 through June, 2019 (2Q19).

Tower CNNOs covered include: American Tower, Arqiva, Balitower, Bharti Infratel, Cellnex, China Tower, Crown Castle, EI Towers, GTL Infrastructure, IBS, Inwit, SMN, SBA Communications, STP, Tower Bersama, and Telxius/Telefonica.

Data center CNNOs: CoreSite Realty, CyrusOne, Digital Realty, DuPont Fabros (now part of DRT), Equinix, Interxion, and QTS.

Bandwidth CNNOs: Chorus Limited, Internap, Level 3, Lumos, Superloop, Uniti Group, Zayo, Cogent, NBN Australia

More details are available in the “sample file,” above.

Abstract

Carrier-neutral providers of network infrastructure continue to play a pivotal role in the telecom sector’s development. CNNOs have grown by 3.3x since 2011 to post $58.8 billion (B) in revenues in 2018 – now more than half of those revenues have been recorded in 1H19 ($30.3B). Since 2011, the sector’s data centers under management have more than doubled, to 624 facilities; fiber route miles have almost tripled, and the cell tower count increased over 10x to 2.4 million.

Historically, much of the CNNO sector’s growth has been acquisition-induced, and M&A has burned nearly as much cash as capex in the sector. However, M&A spending has slowed down of late, and CNNO revenue growth in 1H19 was relatively flat. Year over year revenue growth was just 4.2% in 1H19. Growth in the data center segment remained strong in the latest quarter, but both the tower and bandwidth segments slowed.

Capital spending among CNNOs picked up slightly in 2Q19 and remains high as a % of revenues. In 2Q19, CNNO capex of $5.3B was 34% of revenues vs. 32% in 1Q19 (and 40% in 4Q18). Most CNNO capex is for the purchase of property and related construction costs, with telecom equipment & software taking up a small percentage. Some CNNOs are deploying more intelligence in their networks and evolving business models, though, such as Crown Castle, NBN and Zayo.

Despite the recent blip in growth, we expect CNNOs with a proven track record of acquisitions to continue looking for multi-billion dollar asset deals for the next several quarters and even years. The market could also see some more consolidation as the next market downturn hits. The larger CNNOs will push the envelope on their business model as they grow, adding services on top of their infrastructure and building further to the edge of the network.

  • Table of Contents
  • Figure & Charts
  • Visuals

Table of Contents

  1. Abstract
  2. Analysis
  3. CNNO Segment Overview
  4. Market Snapshot
  5. CNNO Market: Key Stats thru 2Q19
  6. Segment Drilldowns
  7. Company Drilldowns
  8. KPIs by Company
  9. Exchange Rates
  10. About

Figure & Charts

  1. Revenues by type of CNNO (US$M)
  2. Revenues by CNNO type, 1H18 vs. 1H19 (US$M)
  3. Capex by type of CNNO (US$M)
  4. Capital intensity by type of CNNO
  5. Capex & acquisition spending, CNNO total (US$M)
  6. Net PP&E by type of CNNO (US$M)
  7. CNNO towers & average tenancy ratio, global ex-China
  8. Growth of data centers & rentable space since 2011
  9. NRSF per data center (K)
  10. Revenues by company, 2Q19: CNNO market segment (US$M)
  11. Net PP&E by company, 2Q19: CNNO market segment (US$M)
  12. Data center CNNOs: Net rentable square feet, 2Q19 (million)
  13. Data center CNNOs: # of data centers, 2Q19
  14. Tower CNNOs: # of towers by company, 2Q19
  15. Tower CNNOs: employees, 2Q19
  16. Tower CNNOs: Net Profit (US$M) and Net Margin (%), 1Q14-2Q19
  17. Tower CNNOs: Net PP&E (US$M) and Net PP&E/Revenues, 1Q14-2Q19
  18. Tower CNNOs: FCF (US$M) and FCF/Revenues (%), 1Q14-2Q19
  19. Data center CNNOs: Net Profit (US$M) and Net Margin (%), 1Q14-2Q19
  20. Data center CNNOs: Net PP&E (US$M) and Net PP&E/Revenues, 1Q14-2Q19
  21. Data center CNNOs: FCF (US$M) and FCF/Revenues (%), 1Q14-2Q19
  22. Cash from operations (US$M): Tower CNNOs vs. Data center CNNOs, 1Q14-2Q19
  23. Cash & short term investments (US$M): Tower CNNOs vs. Data center CNNOs, 1Q14-2Q19
  24. Net profit margin by type of CNNO
  25. Net Profit by type of CNNO (US$M)
  26. Free cash flow/revenues by type of CNNO (US$M)

Visuals

 

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