GDS - Earnings call transcript Q3 2021

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Operator

Hello, ladies and gentlemen, thank you for standing by for GDS Holdings Limited Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After managements’ prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Investor the of Head Chen, Relations company. for Laura go ahead, Laura. Please

Laura Chen

via XQ Hello provide our The conference then and issued which today we everyone. this summary you. an from call to call today's Mr. Huang, CEO, is COO, strategy online. who answer XXXX are available Chairman performance. company's services results. posted GDS will financial and Welcome is of were at Dan investors.gds-services.com. will Limited. Leading to our Thank downloaded operating presentation Holdings questions. and overview GDS can William to Jamie earning business be review our IR A and Newman, earlier website GDS Founder, Khoo, and call results also during Ms. refer newswire Mr. conference of CFO, the will viewed

that contain the provisions continue, discussion XXXX. of Securities we statements Before Private harbor U.S. today's note safe under of made please Act the Reform will forward-looking Litigation

risks inherent involve statements and Forward-looking uncertainties.

company's and turn to press Please is call financial non-GAAP GDS today. discussions I statements uncertainties Further U.S. unaudited GDS unaudited unaudited go company now assume As such, over financial GAAP the directly these with expressed William. the measures. company's well GDS as contains of include William. unaudited and Chairman regarding as both risks applicable obligation to forward-looking conference filed GAAP does of earnings most results from release ahead, Please different call the non-GAAP under this also the measures. The to Founder, press and information, as a prospectus other will any CEO, measures as law. the comparable the and release in reconciliation information update views the included any SEC. materially be except not may required note that

William Huang

EBITDA today's up with me Thank pleased for adjusted you, solid revenue call. around quarter of results, William, everyone. on This thank another Hello, joining and Laura. report I'm is you XX%. to

further sustained third we momentum. platform underpin our put organic year. full the over further hit In a transition our renewables. And win. strategically of meter We another our in made square took our with in Asia. of booked XX,XXX for diversified areas, our hyperscale secure pipeline capacity sales quarter, progress new square in track key with which XXXX, significant our resource to We on We steps Southeast cable remain We to acquisitions. great organic base a enhance the We in existing we place During target success. future we commitments our important foundations meter expansion for XQ well XX,XXX markets. sales booking to customer

logo new financial of Slide a Two order the Demonstrating sales X, multiyear won bank, largest us. from one orders a of strength customer. framework five under was Two from an China's top were potential shown for which is of we As further Chinese the from agreement platforms, were internet which growing existing the hyperscale the demand highlights with on hyperscale internet institutions. orders. and major

not are that medium back in holding and Our sustained business their customers long-term sales stronger evidence term plans. on

markets but offer to and working For in want continuous way our new low center renewable which government The are see are but well in objectives. And Tier remote to also last integrated energy importance centers GDS that Securing they this want not aligned with they large market. latency data usage. has least industry. it of government importance data governments’ clear depends economy. layoff. use for lead each smart, attached centers, highly customers, a centers want centers which all made scale, digital great The the us complete green these for governmental They They supply of supply applications. the to and sustainability, edge, capacity X of must we data in the data to to terms secure, with want have X and data well policy, efficient, technologically a the will solution advanced. high means recognize the Tier and government is predominantly more

downtown quota key forward, we Going approvals accelerate our already of Tier and the qualified project markets. new expect we difficult In constrained, become in decision X the to took to projects locations. therefore in energy even more will update supplies acquisition some locations,

In – capacity. Turning and of closed the Beijing developed XX, meter and we XX, XX of Beijing, X. brings XX,XXX acquisition square to XX which developable Slide us

an signed another recently complete of data four owned nearly company, we are land and not which on meter addition, of committed. the for project square by XX,XXX acquisition agreement yet In centers capacity, comprising the

And pipeline. acquisition X,XXX extremely hyperscale under years. is our to this a market power area entering up financial of many their X secured market Wuhan development committed whose We at our set In to square where locations. net the early portfolio center an and has are acquisition customers. area has regional customers, square up for net center headquarters an already our mostly XXX This total of complete national square market. IT Shenzhen, located to with new is meters. step for are companies portfolio XXX,XXX province a hub acquiring economic enables projects China, we new headquarters. to over of Guangdong, acquisition Beijing. internet will meters, stage application with addition centers phase or the held that materially be The are are and megawatt. will data in acquiring With data nearly of data construction Central we either X,XXX multiple limited Wuhan capacity are next over The capacity, first or two us and which this enterprise a presence. floor developable floor stated of X, The is of few future a the of development. cloud and we of a In meter projects have Guangdong

Tier terms each in in well X supply of market. are We placed

Turning targets a in weeks XX, report out publish will couple our XXXX. time, ESG we inaugural for to our and set Slide sustainability

by carbon data and XX% companies, their data in-house emissions from companies for today? we the estimate strategy other our percentage of sort over to including reach a come and target consumption. was government, to our FYXXXX, of We center to critically are the therefore for XX%. year, the It typical XX% center And carbon electricity of we total be exceed should over In have operations, green. XX our proper internet electricity stakeholders expect emissions all we neutrality. and it’s and that set carbon customers, As to we of important around current from Where cloud consumption visible is XX XXXX, that centers. In come data us, XX%.

green in three our increasing We usage main are ways. energy

ultimate by center of large in The our energy buildings. started But generation. our We installing scale is developments. first direct to is on renewable some way have data in integrated a investment small solar objective by

We are working happen, take to realize. with this it to partners government make but time and will

but availability is well or and increase to second significantly some of will we as PPP PPP, by markets, is by currently Tier the purchase possible Chengdu few direct Shanghai, constrained And already Chongqing. much The which power next as supply renewable in over are for X in Shenzhen, remote extend sites, the the doing maximum pretty years.

a We is sign of this We is or agreement – of over data China. a user signed centers energy in done purchase carbon tradable deals the centers progress, result context, three largest this a put to emissions Beijing and XX,XXX recently with further to current our RECs, most is are any allowed success To of electricity of These believe CGN as wind, one certificates near-term renewable private POE. among in is into The the in some gigawatt producer practical very portfolio. energy be option. state-owned gigawatt third a solar recently renewable a of purchase hydro that participate industry Energy, with which official lowering multiyear first trading annualized In in consumption. our independent seven market. data the the renewable were credits by power the Beijing’s of allocated XX,XXX over certificates, to in GDS by our New times

in announced Slide commitment Now turning Asia. to project second XX. our Yesterday, we Southeast

Indonesia the process quarter Digital Park, data is and is Indonesia, economic new a development Batam, a zone, for Nongsa you governments. Singapore. support development, our special – has megawatt for location XX from in Greenfield which press in center center from data acquiring Singapore are We the which land both This see XX announcement of strong kilometers from can in

location, Telekom hub. marketability Singapore renewable obtain energy With its ecosystems enhance have site, to around this now At Tech is potential our we in Malaysia's great with center. market interconnectivity Singapore and the door and hyperscale competitive expect next north of for unique for further project in both which the will regional Park addition, We land the edge. strategically in and to data and creating Nusajaya south Johor, this

We will which data before have presence connectivity Telekom enable to a are our for center of with facility, for online. come agreement pleased network us strategic start Malaysia, their and to both capacity kick cooperation available our in signed use own

To a Southeast [indiscernible] major cooperation recently its the prioritized a the providing Our Asia, we center the point, our stronger agreement regional expansion. we for provider success be regional agreement, to signed support reinforce international with by in will and customer strategy provider the home as this the strategic market Chinese data of Under China the their service driven strategy. strategic requirements have customers. region. is our from The a of foundation extends cooperation to cloud

Thank over hand reviews. Now for I and will the operating you. financial to Dan

Dan Newman

Thank William. you,

using more I'd update structure. customers we numbers, develop the ago, A with an XX years the to through of locations is in our for which shown going to-date, GIC. done B-O-T strategic status to remote projects our on Before XX. few partnership like Slide We've provide started a on

finance partnership As to you we established a with GIC recall, projects. may these

original [Technical capital reasonable of investment. deploy with will retain we with level a return GIC are to on while Difficulty] a was we stake earning ownership XX% Our under additional more able which intention and income, fee higher this to

we’ve of projects existing with back first XX% a On purchase stake the now the of and contract of the for new B-O-T transfer X. our GIC in this agreement, signed one sales Huailai

the grew work B-O-T effect underlying by XQ next quarters. equipment underline grew changes, where sales Starting few stakes an the in more adjusted from XXXX, projects XX.X% X.X% transfer will contribution and the in Slide several by revenue on EBITDA GIC our we FX X.X%, gross out grew quarter-on-quarter. adjusted of strip over by We with to XX, profit service XX%

and additional is adjusted committed of XX.X%. Tuning acquisitions. during backlog closing growth mainly driven delivery and first XXXX underlying was utilized up Slide meters. XX, Net Our the projects by from a service revenue were XX,XXX EBITDA second XQ in to excluding margin level B-O-T XX,XXX area square and quarters. step acquisitions of was the move is meters. The seen the square organic This in

However, We a it a XQ. square as be other uncertainties, and transitory. of still XQ thousand server similar we expectations. was In net are at in organic combination which expect attribute this few power XXXX, macro factors, believe a original less now level we meters adds shortages, to

with utilized B-O-T slightly, square in to per meter B-O-T quarter-on-quarter range Following the by the line increased now On X.X% number new trend is of XQ This fluctuations. down normal MFR quarterly all of prior brings agreement and within calculation basis, XQ essentially quarters. GIC, same. square will RMBX,XXX the the projects The per of EMSR all increase in meter per the area a projects consistent is month. for XXXX we inclusion include but quarterly MFR

Slide XX. to Turning

of was with unit percentage increase the additional consumption X.X seasonally the was cost XXXX, due decrease Higher utility result X.X In power temporary XQ utility a margin cost. cost XXXX, points. utility use a million higher on Now revenue, And a grid XQ percentage percentage decrease points when period XX.X% our power RMBXX was margin margin times profit in power. limited. was backup prior The points we summer a supply underlying underlying decrease cost XQ around higher that result mainly power XX.X% a is for of backup X of adjusted quarter-over-quarter. of months, quarter, grid during partly our partly cost compared of of quarter-over-quarter. XXXX, EBITDA XX.X% for backup was and XQ adjusted power the In was gross during power. spent to of of XXXX, for X.X The XX.X% of an

XXXX, XQ almost back is in power far supply normal. So to grid

these so, market. and fully of to generators. through sell negotiations When direct year government a ceiling. These generators higher thermal price During purchase over or regulated base October, the their reforms all the all power thermal electricity output next introduced will to the power enable of with require liberalize allows the a substantially reforms between tariff to through implemented the and our further power us float wholesale reforms to markets

a power may While current XQ. because that have in in quarter. this percentage lead power be Around XXXX customer revenue in elevated which terms We’ll during in the cost, to up of structures, pricing as short-term, seen to of to utility billable see go our thermal lower similar power unit the to pass to the fuel us Accordingly, eventually contracts our a start we this level cost estimate will increased revenue half we of allow costs. on of costs. XQ tariffs expect

XX. Slide to Turning

And our XX, and Malaysia. was respect our of RMBX.X Based billion, is million XXXX, for RMBXX organic had on After which a front. CapEx Kong, our of purchases consideration, announced for China, when deferred today the and RMBX acquisitions will for close related end a billion CapEx land nine further consideration billion of Beijing past XX. of expectations amount for XQ and up of acquisitions. months Hong consideration, and liability mainly in stood we we XX, sheet RMBX.X for CapEx the year, total on acquisitions, billion for of the payable which bank XXXX RMBXXX and balance in acquisition consisting around billion including Our the XQ billion contingent total at RMBX.X at RMBX.X to for

RMBX XXXX We expect to CapEx around XQ be in billion.

completed XQ XX, quarter by refinancing part XXXX, refinancing, and And annual billion Looking our sheet. have ratio In we EBITDA last on debt increased first as RMBX.X had RMBXX.X to financing the our complete of at end balance X.X year-end Slide to on our adjusted of months or position to XXXX, times. we debt further cash RMBX.X billion nine we the billion US$X.X a of our at net plan. of annualized billion

we lower You can refinance to see on significantly continue at a cost. that in Slide XX, all

with beginning are during interest effective benefit XXXX. X.X% to to our a ago see year X.X% We compared which XXXX, in the propped XQ rate, in XQ

year, EBITDA. The RMBX.XX CapEx billion ranges. adjusted we to beginning Turning to increases total than and of the half is of the correspond therefore EBITDA year ranges. half for are revised our that narrowing be namely we the costs. Slide half we to guidance original which lower not to a and originally RMBX.XX expected guidance billion the XXXX RMBX.X included for now rate the guidance power to that could M&A a be billion guidance. included as result in and the the guidance about to RMBX.XX full XXXX Accordingly, for the we revenue gave of total adjusted in in there and the in number at knew of second lower XX, recent acquisition, moving time billion When explained lower of the We BJXX, at only revenue of provided more expect

strategic the year forward our to acquisition, CapEx. results brings decision some year, During accelerate future we which made effectively these

we open future guidance XXXX around development. questions. compared like CapEx the original held will billion RMBXX is invested year, expect We the result, a the have of end CapEx. of originally around our in around be current Out Operator? consistent call which to we RMBXX with to billion, for to At for of have approximately billion the estimate organic, up RMBXX with to of for capacity pull billion. to spent the be year organic RMBX the now provided As XX% full now

Operator

Jonathan is have go the This Capital We Markets. Atkin from RBC Please Instructions] the of from first coming ahead. [Operator question. line

Jonathan Atkin

much. Thanks very

about you does And in. wondered affect you expectations then pace And talked move comments I the that year? was I your slower due growth next about interested for of for to affect utility the the does higher that of how the that revised So kind your guidance. How fuel. in expectations mentioned XXXX. costs margin

Dan Newman

know. don’t you I

can in thousand I few lower likely form, square a fourth quarter thousand about XXXX, said and move own for expectation. today be I meters. quarter, can meters the third guidance providing in few your square to not the is you view. I And fourth our think original make was than We’re some comments and quarter only the another The

in So point I see originally square rebound in we few below a into we start a bottom do year. at respect, but in end move at lot don’t year thousand have meters that next far of expected we’ll some activity. that where this visibility the to the future, a believe will up I

customers It’s enables contracts customer customers in of it’s they make value Our outsourcing of commitments in. give the over fast what advance. to flexibility the how move and part

around So us, the we up it’s up it’s our variance see to estimates, because customers. not always to

we will yes, transitory. I again, own know view electricity last the quarter. you how price. the but have I’m all third tariff was power of assumed higher be revenue the partly of quarter, you it in of more not was saw thermal costs. we again, the to power, again Once fourth cuts, be Therefore, In effect seasonal, relation as far as the elevated once utility costs about partly of longer was thermal power percentage point, a of fuel in your will And a and should that, than that other So I similar revenue we’ve quarter, power. the pricing was as quarter, surprised talk have that the costs this. a the form by predict potentially backup higher and I’m utility to the percentage third we works it’s way. – X higher issues We can’t but by in think of in fourth it about increased higher seasonality cost it a Once and result due so power long utility to liberalization percentage have sure no serious cost

William Huang

hey, color Hello, – Atkin, my this view. add-on Yes. in some

I that a a quickly. of move and that in lot common feeling of is as of demands server rate a in want one, more some customer market down very It’s also problem mentioned, the this the lot there. the moving still net number a the move impact in. energy shortage have strong shipment we But think scroll year. a They the got is customer and Dan

the hope date solved come it If adamant will even that’s we the normal in, to think I ASAP. catch-up be that So this right. will case, the move

year to early strong. very next too it’s revenue orders but the again, it’s at if one is say maintain stood estimate the So thing guidance,

Jonathan Atkin

I that CapEx remarks, balance for the about to prepared it you perspective. of kind to activities, touched wanted your leverage. you the also Thank maybe you can financing kind higher recap but that you’re guiding on joint ask needs, just the given of mentioned sheet in a you future higher on thoughts but venture

all putting the funded you financing consider and the how that future of far So together, into be would options. do some yourself what

Dan Newman

capital of We’re are what for which fully what leverage third sheet in If We quarter we terms increasing currently need whole. this is have at on of do doing. always things for end US$X.X of the year, billion have we the the had option of we to funded the adequate that we’ve cash committed capital, balance we announced. our at the more

US$XXX potentially revolving we We facility, upsize. which credits have a could million, therefore

think for also the bring with GIC strategy However, before, in it’s as I a equity we good B-O-T project projects. to are level, at doing we the like, outside mentioned that

possibilities very type pools capital have and we and well us there sometimes actively of private capital. aware, access we’re to potentially lot at add all public approach, will looking to looking And give fund structures, from a a in would high at comes a the which bid capital very value data And partners. deep of some lower cost markets. for want center private for do you is exposure, As

I and some add value-add John, just – Sorry, want potentially from partners. to

Jonathan Atkin

lastly from a and between XX it now then between my and of And and renewals XX% like end between XX% it’s contract Slide XXXX. service year looks percentage square side, gives the as and meters –

is those thought So renewals? expectations your what around pricing the or around

Dan Newman

renewals the of are downtown most for John, centers. data Yes.

renewal. of a all thing The on to comes is We would note capacity fraction percent. to rate of contracts down practically some are first clash. We’ve been a customers when some holding their has degree. The it I renewed churn renewed up that some for

explained a I U.S. before, not Like, exercise. mark-to-market perhaps it it’s As the in is

context context us, we of in customer. business agree doing of a For we’re the with the where that strategic all the the decision. that overall relationship, it’s In customer renewal the

don’t I a it look think as pricing. you at So market orientated can compete really in

William Huang

different market supply John, color. I and Because situation – different. is the can some add in demand China,

cells. some the So increase in market market, the – our the it’s some new my give benefit. price. market some maybe renew, will flat view price, will strategic a we some Maybe just keep is like customers Maybe will

It And and so demand of is a market the mix strategy. this depends different on situation. supply

Jonathan Atkin

you Thank very much.

Operator

the Instructions] [Operator the Liu next Yang line Please Stanley. have question. We This Thank go from Morgan is from of you. coming ahead.

Yang Liu

the opportunity. for here. Two Thanks questions

terms of demand of especially the this your guess, the first for with CapEx you relatively the key The their in please public about in data build some recently terms demand, the new is one customers outlook cloud center and outs? is, starts the from observed to low. of term us we I Because the of internet in or customers demand GDS that with next talk year. the time share Could customers, customers

the if sure next outlook for year. not I’m So demand

intense you. we acquisitions how than the question that second to is quarter. in competition the of and you Thank The or please close terms Could several those about update Is us downward deal past trend before lot deals? quarters in the valuation or in poor close of trend more trend, less noticed the ago? a intense versus GDS it

William Huang

Okay.

me first your question. answer Let

the think the the new little little our of saw down slow faster customer – we some have we lot more structure hyperscale expectation. that previous of traditional in lot of key time, to have the – think, be grow bit. market a went hyperscale China plan, than same in But In our – recent a – we customer saw convicted but bit shipped general, customers. to the I some maintained idea I a I of maybe

But internet in I and as company think maintain – demand the it’s still strong. very video the bit little of to So a and market shipped general, e-commerce company.

with a is by fact based or this key So customers. our key the communication on

So in very still market’s strong. general, demand very the still

In they saw additional, their institution financial a there, tremendously. lot us. we It’s surprised increased very practice, this of to year CapEx

a lot got So apprenticeship lot of the institution at before a of big we get the we older, – bigger, this year we even end more also expect. the

that think also is kind I continue. So this of available will through

you maybe some Dan, So answer acquisition. can the of

Dan Newman

competition Yes. every There is acquisition. for

dedicated We a your to We team. of earlier. time in try of have a to price. confidence right we opportunities expertise factor, just try track identify to degree be matter leverage which a acquisitions We doing with to counterparty our monitor a GDS, usually not dealing and in them, there’s high And forward. has record give can a move

or places acquisitions, the we’ve and ones far look that a at are there are and the is If on in where allocation. not approvals around constraint constraint a already so and Guangdong. year, today, and the Shenzhen supply on currently they on which project we’ve done you announced quota Those and new this Beijing energy if supply constraint clearly predominantly in

everyone is no in in in organic advantageous, future. near places in or is having option very because I practically organic to think no that the industry the capacity developable the near future be going option those there recognizes

an to appetite highly are opportunities them. of kinds who players pursue China, the these means, capital are that companies, And there after. in mostly a other few have sought private So

to find But mean the this want evaluate various acquisition competition them are or the projects exactly acquisition pre-operational. projects. defined organic what as it in multiples acquisition I opportunity in – estimated take there’s plus by that’s multiples, multiples, costs at about stages talk players the that multiples. the of no we way ourselves with. Regardless usually evaluate for those I’ll the purpose most have And the with the it. say, same about terms we of been So change the cost basis to we take divide of the in I development when when of complete We we stabilized talk discernible to recent of because and enterprise we clarify investors, we EBITDA as communicating value, in

Yang Liu

helpful. That’s very you. Thank

Operator

line We ahead. and Please is coming Company. have Synesael Cowen the from This next from the question. go of Colby

Michael Baca

Hi, Two this is Michael I questions, on may. for if Colby.

get it’s noted you more few Tier in to markets. times certain First, a power getting approvals X that difficult

in If you this markets turn, you could into Asia. you’re you that of versus then color you. doing expand and driving second, forward. balance the you us more or region? you’re Southeast means those recently further in in And announced just what entering moving acquisitions next as organic steps unpack Could are the to that what’s on Thank for CapEx give some the more what look

William Huang

Yes.

last I to think carbon main strategy the the catch demand. to a resource, because – indicative of the strategy. by we years, want is of couple lot up will the a we is, time, we This also to apply we target in our ourself. definitely obtain in customer’s based on the But same market demand, demand, we short-term should, we flexibly always of

will we in – we this market differences demand. the are maintain our strategy. also use organic, always – are in future, we So strategy the general, the to But but is we fulfill by driven the still

Dan Newman

going Southeast in terms answer Asia, Yes. in the me. one question excuse our strategy through we’re of Maybe implementing about, second steps I’ll of

options from made found Our demand initial X on got of very geographic Batam the only what focus here out capacity approvals a normal with satisfied. for got Singapore. in can from is a Singapore what sites has Singapore you kilometers hyperscale data cannot of in over the you’re from we have new an we announced Johor, shore they land Singapore in substantial near those center serving demand Malaysia, region, is we’ve just yesterday, which center coming be Both to customers land that Therefore, given And focused then the currently Johor, up have scale, XX do acquisition Singapore. project market And which data and in we’re Singapore. on of acquiring of where sufficiently moratorium not which home Singapore, the on been on that side large currently around the in that the so in Park, kilometers on which conceivably is solution, increased developments from natural be stumped on hyperscale. are Singapore, for of aware, Tech appetite a from cannot border. Island, is hyperscale, and we’ve as which done we there’s – below But terms address we’ve acquired and hub a a far to constraints but act as Singapore, other

and working into substantially power the of hyperscale to harp. are multi to Singapore the We create point, market and Singapore of very the data will be interconnected the think multi connectivity sites sites connectivity We point network center price network price diverse package renewable energy, very which and combination these supply marketable. with together is between diverse below a renewable well

sites we’re Of for international with this, where last mentioned have our another us of already like been cloud in could into it Chinese site in KL a presence it to be able them way customers. our there today that although anticipate Singapore. zones. go largest very Jakarta strategic one as a connect William Singapore, availability six five I’m large, we the very or with China the not have have zones already Singapore, are cooperation we to years. the we expansion. moratorium strategic working we looking gives availability then that agreement then we’ve customers very, having back-to-back a that these we would with course, and would with in customers, priority working customers do where also them speculating. establish working signed of next, which But replica relaxation be of we where be It’s our around be on into cloud And all for that, beyond in a to conversations Where may the our time Chinese

this of So be connected to that as to the And every and we kind vision would get that Kong and platform progress the then first that’s We’ve that And of I time Hong made into aiming that more far excited about a represents. say rapid being. as we our as the opportunity the course, are be scale month, for highly would very China. pace. get would of extends

be nine six, So I expect developments significant more time, three, report. to the, in there’ll months plenty

William Huang

are to see is before. like FTT. refer increase And our super probably a for years, than exciting – demand potential the lot is a then shareholder, push lot it’s the us we would we opportunity I the a because would we push customer, a – of which step-by-step in-shop saw, saw of we I so and do we is we Yes. opportunity of the what deal to – much we last in – a saw say lot bigger five

then years years into So And China. we six seven decision the what ago. years a made than in years happened say that’s seven six the of – like right sort directly. market jump why or we to much It’s the is the let’s timing scale – had It’s think. the ago flat bigger

we to player. have had meanwhile, to of we In scale. that in difference – tried believe huge let’s region, scale all certain. which is – have local area, a install-based in a very in say our a is cost the number We think just This center in very, very that – customer. demand bring opportunity can very, huge strong the I two, we one, not region, solve because advantage an view very customers that to one – three one. makes huge clear, it’s this advantage. a very in So because give we develop very lower huge leverage have number because GDS our a years us this data Southeast this Number this path very, we They scale our in for advantage we GDS is painful next revealed project, a Asia which

success in GDS definitely or super So region, three believe in this well five years. which I next the

Given all our calculated is an not business addition. new previous plan, the plan five-year – this it’s growth incremental business in

Operator

you. Thank

Our from line James. next comes the question Frank from Louthan go ahead. Raymond of Please

Frank Louthan

Two questions. Thank you. quick Great.

be back losing renewal you’re competitors contracts to any of On any shares of And and question at there installations, the go assets, or that? taking part the to any slower then that that I of the sort a roll or risk rent Thanks. add between facing? want concerns any renewal, different could and at any now customer XX% year-end looking of industry there might down to you the the that that that is significant concentration way,

Dan Newman

Huang. a will I answer. Frank, from different William place Sorry, at I’m

it keep to brief. Just

which XX thousand slightly is in suspect to than I that originally think different for nearly the our say we don’t a like that the move I customer took it doing from expected, to XXXX, few we being We view which customers we it’s what customer. reasons but alone. about lower the what slower, in individual means, November months ago would be talk meters square customers, about

relationship our really renewals, – that were a from in to favor competition. But moving to from benefit Again a like XX it’s moving. think customers have of insignificant. of It’s elsewhere. But quarter. to we often ahead maybe I actually X.X% them. service the I with are us you centers what You the for the may terms don’t in us giving is available provider’s of fortunate giving we we mentioned it I data say mention priority Generally, because result prioritizing of opposite capacity of benefit of facility. actually because another last statistically moving very customers churn XX customers and was would say moving They thinking. rate not several into

they So amongst up in downtown. movement The I built I to are we means the were that seven are And you Downtown renewal, that that customers on tells centers, Beijing. for first that capacity. coming data think six, no customer Shenzhen, Shanghai, there’s the five, in base. which are the that holding say

about a account the of of and negotiation. that purely simply that a factors conduct talked negotiation. price we it’s some when take William into So we matter

Frank Louthan

very you Thank much. great. Okay,

Operator

Jefferies. from We have the Lee ahead. question next Please go Edison from

Edison Lee

for would on to GIC. B-O-T just the the that being, Hi. I the doing with Thank you think question. me are ask time one you projects opportunity giving the for to I stick

management to to we sell And the to want go right XX% previous now then up and XX%. collect GIC, fee to you a was So idea XX%.

So in collect from this still this change for to terms but to projects. GIC, collect equity of will XX% IRL and cash own flow less doesn’t are change XX% mean that in you because you how a to going project, are a prospect you from money higher going

Dan Newman

Yes.

You’re correct.

percentage take it’s changed share to the a happens, services a and We costs operating and gives and We own fee, revenue take those arrangement directly us incur economic which certain as margin. that of share. a operating revenue the we and our we cover costs receives not provider a covers structured the management costs. is have GDS revenue so We a as these of projects,

the be now the thought would Originally, charging project we’re share. we’re companies, we the XX%. of revenue So that owning XX% companies, we owning project

projects although shareholders we fees. capital we happens on sense some it decided work few enhance to It of the a capital, return insignificant, could for we of to much get to for so So was we it light enormous. We a I the at latter more look these approach the do the like as GDS, and in then majority charge involvement that of looking more think come that as sense, a that at partnership a different yes, the for and Previously we to it’s to quantum the approach. a times. just were but management And deploy GIC, and it’s capital way we’re and capital trying management that all that the and start customers that us but looked at with minimize charging thought we XX% these is, fees But customers of up then approach. fees our to we and the did B-O-T better now maintain the management kind And by structures, us we management customers shipping the not made not simply stake, XX% very opportunity GIC. for we asked it the were did of maximize invested. this take

that So for another was it. doing factor

Operator

you. Thank

from have line from of our Li go coming CICC. We ahead. the Please next Hongjie question

Hongjie Li

just regarding question renewable solar green to investment mentioned energy. Because that management. the Thanks you panels. My in direct is energy do on more generation in initiative presentation like

So on how outlook Thank CapEx you. impact should the margin. incremental we the

Dan Newman

We mention did that. Yes.

be And innovative it be That invest generation some on I would to think and integrated develop our highly time them. to in in to time markets. that able center put development. objective X that power is around strategically an to top projects like takes basis and a data with together renewable Tier

doing it, In I to an years to that’s it energy So which realize OpEx. meantime, it that of will it to area think – means make the the make most in of we’re happen. make is several take what objective, renewable to

around renewable I’d power RMBX.XX. thermal delivery – really Direct at an power top markets, RMBX.XX, can for RMBX.XX the only RMBX.XX as say on around renewable power. at $X.XX where RMBX.XX to happen take energy personal in in costs, of renewable renewable hour top look able typically certificates RMBX.XX. Tier the per power, RMBX.XX on if which now, look you RMBX.XX end-user, about averages places of And RMBX.XX is and you you’re it of we’re right the premium utility to If – typically cost X to kilowatt

idea of OpEx. some you the gives that So what in of cost is terms

allocation significant renewable energy made in CapEx We any to investment generation. haven’t yet

William Huang

I pressure. strong an color more neutral, So add the right? data impression from center, our are all facing on green guess, they Yes, would customer get that. the some I all carbon

our We to based to customer. already will So our we talked the transfer on customers. costs this, believe

Operator

Thank you.

there back this further questions call I’d like for As the are closing to Please at go no company to moment, remarks. turn the ahead.

Laura Chen

joining Thank all for once today. you again us

contact further contact Thank If please to Bye. website you The our you relations investor all. questions, free Group have the feel investor information through or on Piacente GDS relations.

Operator

call. conference participation. your this concludes This all Thank for you

your disconnect lines. now may You

GDS Holdings Limited (GDS) 16 Nov 212021 Q3 Earnings call transcript