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Communications Infrastructure 2021 Conference Summary

Core Content Overview

The Credit Suisse 23rd Annual Communications Conference focuses on Communications Infrastructure, including data centers, towers, and software-defined networking (SDN). The conference includes company presentations, management discussions, and private equity panels, highlighting the evolving landscape of digital infrastructure investment. Key themes include market demand trends, pricing dynamics, industry consolidation, and the impact of the pandemic on infrastructure development.

Attendees and Presenters

Publicly Traded Companies:

• American Tower (AMT)
• Digital Realty (DLR)
• Cogent Communications (CCOI)
• Switch (SWCH)
• Megaport (MP1.ASX)
• Colony Capital (CLNY)
• NEXTDC (NXT.ASX)
• 21Vianet Group (VNET)

Private Data Center Operators:

• Compass Data Centers
• Cyxtera Technologies
• DataBank
• DC Blox
• Evoque Data Centers (Formerly AT&T data centers)
• Flexential
• Opus Interactive
• Recovery Point Group
• Sabey Corporation

Edge Data Centers:

• VaporIO
• EdgeMicro

Software Defined Networking (SDN) Companies:

• Megaport
• PacketFabric

Key Themes and Discussions

Data Center Investment Opportunities:

• Industry Consolidation and inflection points are major topics, with a focus on pricing, yields, lease terms, and pipelines.
• Private equity panels will discuss the competitive landscape and how to navigate the scaling digital infrastructure market.

Edge Data Centers:

• Edge data centers are positioned as the next frontier in digital infrastructure.
• Companies like EdgeMicro and VaporIO are leading the charge, offering modular, carrier-neutral solutions to reduce latency and backhaul costs.

SDN and Multi-Cloud Networking:

• SDNs interconnect multi-tenant data centers and public cloud providers into a cohesive network.
• MTDC connectivity growth is driven by cross-connect volume increases, with industry leaders such as EQIX, DLR, COR, QTS, and SWCH showing increased activity.

Market Trends and Pandemic Impact:

• Post-pandemic, customer behavior and market demand are shifting, with flexible working models and increased reliance on digital infrastructure.
• Supply chain issues and chip shortages have impacted development plans, while inflation and cost pressures are also being discussed.

Financial Models and Capital Needs:

• Evoque Data Centers and EdgeMicro are questioned about their financial models, pricing strategies, and capital requirements for future growth.
• Cogent Communications and Radius Global Infrastructure are also asked about their capital allocation, profitability, and growth strategies.

Key Questions and Focus Areas

• Company Overview: Attendees are asked to provide a 2–3 minute overview of their business.
• Market Demand: Questions about trends, growth areas, and surprises in the market.
• Strategic Partnerships: Inquiries about collaborations with Brookfield and other digital infrastructure asset classes.
• Pricing and Yields: Discussions around pricing dynamics, lease terms, and yields in the data center and tower sectors.
• Long-Term Impacts of the Pandemic: How COVID-19 has changed the industry landscape and customer behavior.
• Capital Needs: How much capital is required for growth and in what bursts over the next five years.
• ESG Focus: Cogent Communications is asked about its ESG initiatives.

Research Analysts

• Sami Badri – Communications Infrastructure/Equipment
• George Engroff – Telecom, Cable, Media
• Lauren Lucas – Communications Infrastructure/Equipment

Relevant Credit Suisse Research

• "The Cloud Has Four Walls" – 2021 Mid-Year Outlook
• "Towers: Multiple Growth Catalysts Remain" – June 1, 2021
• "Communications Equipment & Infrastructure: This Service Provider Cycle is Significantly More Durable" – May 26, 2021
• "Data Centers: Five Key Areas Investors Are Discussing" – March 9, 2021
• "Comm. Infrastructure and Equipment: Solid Overall Read-throughs" – January 27, 2021
• "US and Europe Towers: The Next Digital Infrastructure Frontier" – January 26, 2021

Recent Company-Specific Research Highlights

• EQIX: Capital from asset sales being recycled into core facilities.
• RADI: Strong portfolio acquisitions and equity raise demand.
• CCOI: Positive new megabit pricing and corporate recovery.
• AMT: Strategic stake sale to CDPQ and evolving domestic outlook.
• Evoque: Transition from AT&T and expansion into global colocation.

Conference Agenda Highlights

Day 1 (June 14, 2021)

• Track One: Advertising Forecast, Ad Buyer Panel, Future of Wireline Networks, Wireless Retail Update, View From the FCC
• Track Two: Box Office Panel, Chief Executive Round Table, Communications Sector Keynote
• Track Three: Data Center Presentations, Private Equity Panel, Edge Data Center Presentations

Day 2 (June 15, 2021)

• Track One: Media & Sports Betting, Communications Sector Keynote, View From the FCC
• Track Two: Theater and Live Events Recovery, AMC CFO Discussion
• Track Three: Data Center Presentations, Private Equity Panel, Communications Sector Keynote

Summary of Key Companies

Evoque Data Center Solutions

• Founded in 2018, acquired AT&T data centers in 2018.
• Operates 31 global data centers across 11 countries.
• Carrier-neutral with access to cloud providers.
• Leadership includes industry veterans with 20+ years of experience.

American Tower (AMT)

• Primary business: Leasing space on communications sites.
• Property operations account for 98% of revenues in 2019.
• Management team has 10+ years of experience.
• Recent developments: MLA with DISH, stake sale to CDPQ, and international expansion.

EdgeMicro

• Colocation company launched in 2017.
• Focus on edge data centers and modular solutions.
• Carrier-neutral and uses patent-pending ETX technology.
• Leadership includes 30+ years of experience in the industry.

Cogent Communications (CCOI)

• Tier 1 ISP with 54 data centers globally.
• Two customer segments: Corporate and NetCentric.
• Leadership includes Dave Schaeffer (CEO), who has led 13 acquisitions.
• Pricing and growth in NetCentric and corporate segments are key topics.

Radius Global Infrastructure (RADI)

• International tower operator with acquisition focus.
• AP Wireless is its operating company.
• Acquisition capex increased to $100M+ in the second quarter.
• Rent per site has quadrupled in recent quarters.
• Leadership includes industry veterans with diversified real estate and infrastructure experience.

Conclusion

The conference provides a comprehensive overview of the communications infrastructure sector, emphasizing data center growth, edge computing, SDN innovation, and private equity investment. It includes key industry players, analysis from leading analysts, and discussions on market trends, financial models, and long-term strategies. Attendees will gain insights into industry consolidation, pricing dynamics, and the evolving digital infrastructure landscape.