Jennifer is Managing Director at Greenhill & Company. She focuses on the North American Communications Services & Infrastructure spaces. Prior to this role, Jennifer was as Managing Director and Senior Equity Analyst at Wells Fargo Securities for 25 years where she focused on the Telecommunication Services, Cable, Data Center and Tower sectors. During her tenure at Wells Fargo, Jennifer received numerous awards including top rankings from Institutional Investor in the Communications Infrastructure space for each of the last four years (2017 – 2020).
The importance of connectivity-rich data centers to 5G
Equinix (EQIX) recently published its third annual Global Tech Trends Survey (GTTS). This survey gathers views and insights from 2,600 IT enterprise decision makers in 26 countries across EQIX’s three regions (Americas, Asia-Pacific and EMEA). It never disappoints! Given its strong connectivity reach, one could argue that more than any company, Equinix has the most ‘tangible touchpoint’ as to how enterprises are viewing the digital infrastructure space and their future needs.
While this report had many take-aways and learnings, the three most interesting data points in my view were as follows:
It is all ol’ chicken and egg discussion with 5G: Build it and it will come, but it won’t come until it is built. Those enterprises that sit out on this spending run significant risks of being part of the ‘left behind’. We think most realize it and if you are a company leveraged to this space (towers, small cell, DAS owners, private network players, edge compute, etc) the roaring 20s may be just beginning!
While we know an author is always biased toward their own work, those companies which are at the center of these themes are the connectivity-rich data center entities. Equinix and Digital Realty top this list. A perhaps overused line in the wake of COVID has been “companies need to make a digital pivot.” Of course this is true. But there are layers underneath this ‘digital pivot’ that should not be ignored. While the loud sucking sound of the cloud has been appreciated for a while, the impact of 5G on data centers has not.
In word searching the last EQIX Q1’21 earnings conference call, it is interesting to note that while the word ‘cloud’ came up 18 times, the phrase ‘5G’ came up only once. Dollars to donuts (to quote my 75 year old mother!) that mention goes up big time this time next year.