This report reviews the growth and development of the carrier-neutral network operator (CNNO) market. The report tracks a wide range of financial stats for 47 CNNOs across the globe, from 1Q11 through 4Q23. For the full-year 2023, the companies covered by this study represented $99.7 billion (B) in revenues (+5.1% YoY), and $34.8 B in capex (+7.8% YoY). At the end of 2023 (EOY23), these CNNOs had $261.1B of net plant, property and equipment (net PP&E) on the books (+3.9% YoY), and employed approximately 113,000 people (+2.1% YoY). The CNNO market is the smallest of three operator segments tracked by MTN Consulting on a quarterly basis, alongside telco & webscale, but CNNOs play a crucial, complementary role in the communications sector and own and operate a large portion of the world’s cell towers, data centers, and fiber networks. In the old days, telcos did it all: they owned all the network infrastructure, they manufactured the switches and transmission gear deployed in the network, and even provided CPE. That model is long since extinct. The telco of 2024 cobbles together its physical network from a mix of owned and leased or rented resources. Cloud providers in the webscale world do the same; while they spend heavily on capex ($192B last year), they generally lease fiber or transmission bandwidth, and only own a portion of their data centers. CNNOs do serve other end markets, including various enterprise verticals (finance, media, and energy), and government. But telcos and webscalers are the biggest targets. CNNOs play a vital role in the network design and cost structure of these operators. In addition to demand from the telco & webscale markets, other factors driving the development of the CNNO sector over the last decade include: low interest rates (in the past) enabling debt-financed expansion (M&A and capex); the tax advantages of the real estate investment trust (REIT) operating model; and, the growth of the asset pool managed by private equity, a key source of funding for CNNOs. Private equity is the single largest force driving the CNNO market today. Recent developments include: Blackrock acquired Global Infra Partners (1/24); Blackstone partnered with Digital Realty on a $7B hyperscale JV (12/23); Brookfield bought Cyxtera (11/23) and the Indian tower assets of American Tower (1/24); EQT acquired EdgeConneX (1/24); KKR purchased TIM's fiber network NetCo for $24B (1/24). More broadly, a number of large PE firms are creating portofolios of "digital infrastructure" assets, and buying up or funding new CNNOs. They're attempting to create synergies across their digital investees, sometimes through mergers, and synergies with other parts of their investment portfolio. With the rise of GenAI, for instance, some PE firms are investing directly in energy supply in order to ensure competitive rates and terms for the data center players in their portoflio. Below are some highlights from the report: Revenues: from under $20B in 2011, the CNNO sector recorded revenues of $99.7B in 2023. This 5.1% growth is only a bit slower than the 6.2% growth of the webscale sector last year, and far ahead of the 1% revenue decline experienced by telcos in 2023. The largest 5 CNNOs by revenues in 2023 were China Tower (CTC), American Tower (ATC), Equinix, Level 3, and Crown Castle. Three of these are almost entirely focused on one type of infrastructure: cell towers for CTC, data centers for Equinix, and fiber/bandwidth for Level 3. However, ATC has substantial holdings across cell towers, data centers, and fiber, while Crown Castle has both cell towers and fiber. Both are good representations of the trend towards infrastructure convergence in the CNNO sector, where individual corporate entities seek out synergies from owning a more complete “platform” of assets. Many private equity firms are also attempting to create a virtual “platform” through holdings across different portfolio companies, but it’s not clear that this can be truly accomplished without a single corporate entity, ideally with public reporting requirements. To grow over five-fold in a decade, the scope of the market has expanded dramatically: most importantly, telcos have spun off assets to create or enlarge many CNNOs. For instance China Tower entered the market in 2015 when the Chinese government merged the tower holdings of that country’s three state-owned telcos. On a far smaller scale, US-based Uniti Group was created in 2015 when Windstream, a telco, spun out most of its passive network infrastructure holdings. Many other such spinoffs were accomplished over the last decade in order to grow the CNNO sector. This is why the CNNO sector spends so heavily on M&A: since 2011, M&A spending has totaled $228B, not much less than the $291B capex spend for the same period. Capex: from ~$6B in 2011, CNNO capex was $34.8B in 2023. That is up nearly 8% from the 2022 total, in a year when capex for telcos and webscalers fell 4% and 5%, respectively. CTC reported the highest capex, followed by Digital Realty, Equinix, Cellnex, and NBN Australia. A major reason for CNNO’s healthy capex last year was widespread enthusiasm for generative AI, and an investor view that CNNO data centers can ride this enthusiasm to faster growth as long as they invest now, in a big way. To speed development, the two largest data center-focused CNNOs are both using creative financing vehicles to build hyperscale-class facilities for the big cloud providers. In December 2023, for instance, Digital Realty announced a $7B JV with Blackstone, to build 4 hyperscale campuses across three metro areas on two continents, supporting an IT load of up to 500MW, or the equivalent power needs of over 300K households. Profitability: average net margin for the CNNO sector was 2.9% in 2023, up from -0.2% in 2022 but down from the +6.8% of 2021. Free cash flow margin also disappointed in 2023, amounting to 4.9%, less than half of the 10.4% and 11.5% recorded in 2021-22 respectively. Rising interest rates were one of several factors. CNNOs had nearly $243B of debt on the balance sheets at EOY23, and just over $19B in cash & investments. Even with strong demand trends, some CNNOs are attempting to streamline operations in order to cope with their heavy debt load. American Tower, for instance, sold off its Indian operations for $2.5B in Jan. 2024, to Brookfield. Employees: CNNOs ended 2023 with about 113K employees, from 110.7K at EOY2022. CNNOs aim for efficiency in the operation of their infrastructure, and use automation when possible to lower labor costs. However, most CNNOs engage in M&A and hence often need to integrate & rationalize assets before they can reap the scale & synergy benefits. There can be some delay as adjustments to the workforce are made. On a revenue per employee basis, the CNNO sector is impressive, at over $890K per employee in 2023, up slightly from $870K in 2022. This compares to $584K for webscale in 2023, and just $392K for the telco market.