21Vianet Group, Inc. (NASDAQ:VNET) Q3 2019 Earnings Conference Call - Final Transcript

Nov 18, 2019 • 08:00 pm ET

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21Vianet Group, Inc. (NASDAQ:VNET) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Your first question comes from the line of Rex Wu from Jefferies. Please ask your question.

Analyst
Rex Wu

Thank you management for taking my question. So I'll ask three, first. So, number one, it's -- we see in this quarter, we added 1,500 new cabinets -- self-built cabinets. And you mentioned about 2,000 backlog. So, based on the guidance of 6,000 new cabinets for the full year, we still need to deliver about like 4,500 new cabinets. So, do you -- are you still reiterating the new cabinets target? And second, it's -- the utilization is still maintained at 66%. So, in which region is below the average, and how do you plan to improve? And number three is, can you talk more about the upcoming wholesale pipeline for 2020? Thank you.

Executive
Shiqi Wang

This is Alvin. Thank you, Rex for your questions. Your first question regarding the capacity in the -- new added capacity in 2019. I should say, in the fourth quarter of this year, so we will deliver another 4,000 plus new cabinets. So, we are confident to deliver the capacity according to our guidance for this year's new capacity expansion target.

And secondly, it's regarding the utilization rates, we are currently see -- we'll see a strong demand from our customers across the regions. But still that -- we see that in some regions, especially Tier 2 cities, we see the customer demands are lower than average, so that's the current situation. But still, that -- what we see in the Tier 1 cities, we will see very strong demand. That's why we -- as we said before that we have 2,000 cabinets backlog, so mainly in Tier 1 cities. And for 2020, wholesale types, we are now have very strong engagements with all the top public cloud players across China. So we are confident to secure further projects, in addition to current the two deals with two major public cloud players this year.

Analyst
Rex Wu

Thank you.

Operator
Operator

Thank you. Your next question comes from the line of Camille Xu from Morgan Stanley. Please ask your question.

Analyst
Camille Xu

Thank you for the opportunity. Hello?

Operator
Operator

Please, continue.

Analyst
Camille Xu

Okay, thank you for the opportunity and congratulations on the good result. I have only one question about the financials. I see the G&A expenses decline accelerated to about 25% year-on-year this quarter, which I think, is a good signal for efficiency improvement. So I just want to know, is there any more fat to cut here. And what is the expected run rate for the G&A expense going forward?

Executive
Sharon Xiao Liu

Thank you, Camille. This is Sharon. I will answer your question regarding to our G&A and operating expenses. You're right, if you are looking at our financial statements, you can see a decline of the operating -- adjusted operating expenses, especially the G&A, that was because of our operating efficiency and leverage, as well as the capitalization of certain expenses because we spent more expenditures on the resources funding, as well as the construction and all