Market Research Report
Carrier-Neutral Network Operators - 4Q19 Market Review: Further Sector Consolidation on Cards Amid Virus Outbreak Spread
|Published by||MTN Consulting, LLC||Product code||941814|
Delivery time: 1-2 business days
|Carrier-Neutral Network Operators - 4Q19 Market Review: Further Sector Consolidation on Cards Amid Virus Outbreak Spread|
|Published: June 2, 2020||Content info:||
Carrier-neutral providers of network infrastructure are often touted as the backbone of telecom and webscale sectors. CNNOs continue to play a pivotal role in the overall growth and development of telecom and webscale markets. CNNOs have grown by 3.7x since 2011 to post US$71.3 billion (B) in revenues in 2019. Since 2011, the sector's data centers under management have more than doubled, to 635 facilities; fiber route miles have almost tripled, and the cell tower count increased over 12x to ~2.5 million. Excluding China, CNNO cell towers grew from just over 200K in 2011 to over 500K at year-end 2019.
The CNNO sector's growth has largely been acquisition-induced in the past, and M&A has burned nearly as much cash as capex in the sector, or even more in two calendar years (2015 and 2017). However, M&A spending has slowed down of late before picking up again in 4Q19, and CNNO revenue growth in the year was relatively flat - YoY revenue growth was just 4.1% in 2019. Growth in the sub-segments have been mixed during the year: the data center sub-segment's growth reached double-digits (10.1%), the bandwidth sub-segment posted modest growth of 4.4% while the tower sub-segment grew by a meagre 1.9%.
Other findings from our full-year and 4Q19 analysis include:
The year 2020 could escalate an already 'stalled growth' atmosphere for the CNNO sector as the rapid outbreak of coronavirus and its spread worldwide is threatening to push the world economy into one of its worst recessions ever witnessed. As the downturn deepens, the sector could witness some more consolidation. A few CNNOs with a proven track record of acquisitions will continue to look for multi-billion dollar asset deals in the next several quarters and even years. 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. Top-line growth will tick up again with M&A deals, and the continued growth of new build CNNO networks (e.g. NBN).