Good morning and good evening ladies and gentlemen, thank you and welcome to 21Vianet Group's Fourth Quarter 2020 Earnings Conference Call. With us today are Mr. Samuel Shen, Chief Executive Officer and Executive Chairman of Retail IDC; Ms. Sharon Liu, Chief Financial Officer and Ms. Rene Jiang, Investor Relations Director of the company.

I will now turn the call over to your first speaker today, Ms. Rene Jiang IR Director of Vianet. Please go ahead, ma'am.

Rene Jiang - Investor Relations Director

Thank you, operator. Hello, everyone. Welcome to our fourth quarter and full year 2020 earnings call.

Before we start, please note that this call may contain forward-looking statements made pursuant to the Safe Harbor provisions for the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectations implied by these forward-looking statements. All forward-looking statements are expressly qualified in their entirety by the cautionary statements risk factors and details of the company's filings with the SEC. 21Vianet undertakes no duty to revise or update any forward-looking statements for selected events or circumstances after this date of this conference call.

I will now turn the call over to Mr. Samuel Shen, CEO of 21Vianet.

Samuel Yuan-Ching Shen - Chief Executive Officer, Executive Chairman of Retail IDC

All right. Thank you, Rene. Good morning and good evening, everyone. Thank you for joining us on our earnings call today. During the fourth quarter of 2020, we exceeded our previous guidance range and grew our net revenues by 28.6% to RMB1.35 billion from RMB1.05 billion a year ago. In addition, we expanded our adjusted EBITDA margin to 28.9% from 25.2% and grew our adjusted EBITDA to RMB389.8 million from RMB263.8 million during the comparable periods.

We attribute such solid results to robust market demand, methodical resource expansion, meticulous customer services and strong sales momentum. 2020 was an extra-ordinary year as we encountered both unprecedented challenges and tremendous opportunities. The challenges brought on by COVID-19 were certainly exceptional. Yes, out of the heap of challenges [Indecipherable] the robust demand for data center services. Since the pandemic outbreak, we have witnessed a substantial change in both consumer behaviors and corporate mentalities. Some of those changes were transitory while others are permanent. We believe that the migration towards online entertainment, e-commerce, mobile computing, remote collaboration and digitization services are permanent that's fueling the tremendous demand for IDC services. In addition, favorable government policies are also accelerating the digitization trend, which in turn are further stimulating the market demand for our solutions and services.

To satisfy such growing market demand, we have been proactively expanding our capacity and resources. As of December 31, 2020, our capacity reached 53,553 cabinets in total, 93% of which were self-built and the remaining 7% of which were partnered. In the fourth quarter, we added 2,077 cabinets on a net basis. Our compound capacity utilization rate was 60.4% during the fourth quarter, among which our utilization rate was 77.8% for mature IDCs and 31.7% for ramp-up and newly built IDCs. As we ambition unabated market demand for the foreseeable future, we have proactively expanded our resources.

During the fourth quarter, we acquired a data center in Beijing with approximately 2,000 ready-to-use cabinets, already under commitment to a public cloud customer. Such additional capacity should enable us to better serve large enterprise customers who continue to locate their mission critical data processing operations in Tier 1 cities to achieve ultra low latency. The requirements and preferences of this large enterprises limit the potential locations of their data centers to within a 100 kilometers radius from metropolitan areas. While we are expanding our capacity, we are also implementing strategic initiatives to ensure our capacity, environmental, sustainability. Such efforts include increasing our renewable energy utilization mix, improving the effectiveness of our power and water usage and reducing our carbon intensity across all of our data centers. To increase the transparency of our corporate sustainability practices, we are currently preparing our initial ESG report and plan to publish it later this year. Beyond expanding our capacity in a methodical and sustainable manner, we also continued to leverage our flexibility in providing hybrid and multi-cloud infrastructure solutions which are enhancing our clients services. We have seen the consumer and corporate behavior changes in 2020. We have taken the proactive and data driven approach that enabled us to not only measure, forecast and attract unique IDC requirements for individual clients across industries, but also strategically plan our resource expansion and optimize our site selection to align our development with our clients' growth trajectory. As a result, we have forged tight bonds with our customers and become an indispensable partner for our clients to cultivate their own evolving ecosystems.

During the fourth quarter, we acquired a new public cloud customer who had started moving in as of the first quarter of 2021. In addition to securing new cloud customers, we also ramp up our engagement with large scale enterprises. We were able to sign an MOU with the popular content community and social platform company. As of today, we have accumulated wholesale MOU in service or under contract to over 180 megawatts. We also continued our extensive discussions with an online entertainment company which is interested in utilizing a portion of our IDC capacity in Shanghai where its headquarters are located to support its rapid growth.

In summary, we have accumulated abundant capacity, procured additional resources and forged the strong client relationships. With the additional capital raised from our recent convertible bond offering, we are well positioned to capitalize on the robust market demand emerging in the post-pandemic area.

With that, I will turn the call over to Ms. Sharon Liu, our CFO to review our financial results for the quarter. Sharon?

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Thank you, Samuel. Hello, everyone. Before we start our detailed financial discussion, please note that we will present non-GAAP matters today. Our non-GAAP results exclude certain non-cash expenses, which are not part of our core operations. The details of these expenses may be found in the reconciliation tables included in our press release. Please note that unless otherwise stated, all of the financial numbers we are presenting today are for the fourth quarter of 2020 and are in RMB terms and that percentage changes are on year-over-year basis.

We concluded 2020 with strong fourth quarter financial results, mainly attributable to our resource expansion capacities on-track and efficient cabinet delivery to customers and improved operating efficiency. Our revenues for the fourth quarter and full year of 2020 both exceeded the high-end of our guidance ranges while our adjusted EBITDA for the fourth quarter and full year of 2020 both were within our guidance ranges.

Revenue in the fourth quarter increased by 28.6% to RMB1.35 billion from RMB1.05 billion. This increase continued to be driven by the industry's ongoing growth as well as our steady capacity expansion, which allowed us to better satisfy the growing demand for a scalable retail cabinet and a carrier-neutral wholesale IDC solutions in the quarter. Retail IDC MRR per cabinet in the first quarter increased to RMB9,131. We added around 2077 new cabinet during the first quarter. As of December 31, 2020, we operated and managed 53,553 cabinet. Recognizing the ongoing growth in customer demand, we also worked to expand our cabinet capacity while remaining focused on maintaining healthy and stable cabinet utilization rates.

Our compound utilization rate in the first quarter was 60.4%. More specifically, our utilization rate for those mature IDCs delivered prior to 2019 improved to 77.8% compared to 77% in the prior quarter. Our utilization rate for ramp-up IDC and newly built IDCs were 31.7% compared to 35.9% in the prior quarter. The decrease mainly contributed to a large amount of cabinet delivery at the end of the third quarter. Adjusted cash gross profit in the first quarter, which excludes depreciation, amortization and share-based compensation expenses was RMB581.9 million compared to RMB425.9 million in the same period of 2019. Adjusted cash gross margin was 43.2% compared to 40.6% in the same period of 2019.

Adjusted operating expenses in the first quarter, which exclude share-based compensation expenses, impairment of receivables from equity investees and impairment of long-lived assets were RMB215.5 million compared to RMB184.2 million in the same period of 2019. As a percentage of net revenues, adjusted operating expenses in the first quarter decreased to 16% from 17.6% in the same period of 2019, demonstrating our improved operating leverage and operating efficiency. Adjusted EBITDA in the first quarter grew by 47.7% to RMB389.8 million from RMB263.8 million in the same period of 2019. Adjusted EBITDA margin increased to 28.9% from 25.2% in the same period of 2019.

Owing to loss of RMB957.1 million from changes in the fair value of convertible promissory notes during the fourth quarter, our net loss attributable to ordinary shareholders was RMB1.02 billion in the period compared to net loss attributable to ordinary shareholders of RMB16.4 million in the first quarter of 2019. Basic and diluted loss, those were RMB1.28 per ordinary share and RMB7.68 per ADS. Each ADS represents six ordinary shares.

Moving onto our balance sheet and liquidity. At the end of the first quarter, our debt-to-asset ratio was 64.5% after taking out the effect of the changes in the fair value of convertible promissory notes. Our debt to adjust EBITDA ratio was 3.1. In addition, net cash generated from operating activities in the first quarter was RMB283.8 million. As of December 31, 2020, we reported a cash position of RMB3.4 billion. During the quarter, our efforts to maintain a strong balance sheet and leverage our solid reputation in the capital markets enabled us to further cultivate our future growth prospects, as such, we successfully executed a public offering of convertible notes for aggregate principal amount of $600 million in the January. This successful note issuance further demonstrating our acknowledged growth potential, significant brand value and strong investor interest. Going forward, we plan to use the risk proceeds to satisfy our capex demands and to repay our existing note that will come due in 2021.

Looking ahead into 2021, we continue to see a number of potential M&A opportunities and the regard brownfield sites as a variable supplement to drive organic growth. We plan to continue expanding our IDC business in a prudent and a balanced manner, while leveraging our value-added service offerings to cultivate more business opportunities with our existing customers in turn. Our balance sheet strength will also serve as a significant competitive advantage, enabling us to secure those IDC resources that align with our long-term growth targets, enable us to capture additional market share and provide us with more customer engagement opportunities in key markets.

In 2020, our total capex was RMB4 billion, including M&A payment during the year. We expect 2021 capex to be in the range of RMB5 billion to RMB6 billion including acquisitions that we have bought up [Indecipherable]. Looking ahead, we expect net revenue for the first quarter of 2021 to be in the range of RMB1,375 million to RMB1,395 million and adjusted EBITDA to be in the range of RMB395 million to RMB415 million. For the full year of 2020, we expect net revenues to be in the range of RMB6.1 billion to RMB6.3 billion and adjusted EBITDA to be in the range of RMB1.68 billion to RMB1.78 billion. This forecast reflects our talent and the preliminary views on the market and operational conditions which are subject to change and do not factor-in any of the potential impact that could be caused by the COVID-19 epidemic in the future.

This concludes our prepared remarks for today. Operator, we're now ready to take questions.

Question & Answers

Operator

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Yang Liu from Morgan Stanley. Please ask your question.

Yang Liu - Morgan Stanley - Analyst

Thanks for the opportunity and firstly I would like to, congratulations on strong results and new customer addition. My first question is related with this new wholesale customer. You mentioned social and content company. Could you please disclose more in term of their current demand outlook and the order size 21Vianet had already got and also share about the return profile of the customer.

The second question is, I would like to hear management comments on the resource [Indecipherable]. Is it becoming more and more difficult than before to get resources maybe [Indecipherable] etc and will this impact your three-year expansion plan. Thank you.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Thank you, Liu Yang. I will take your first question. Regarding to the new logo, actually it's a public cloud service provider in China with amount of 2,000 cabinet. Those MOU start to move in from Q1 this year and for the returns of these projects is still at the company's accepted level. Thank you.

Samuel Yuan-Ching Shen - Chief Executive Officer, Executive Chairman of Retail IDC

Hi Liu, this is Samuel. Get to CEO virtually, I'm taking on the second question. You mentioned about travel in probably metropolitan area and surrounding areas is getting a little bit tough to secure the land together with the current quota and I think the answer is, yes, that's a general situation. That being said, because we have been in the industry for almost 25 years and then we do have a strong relationship with the government and we pay a lot of attention on the government's requirements in some suppliers. If you drill down and double click on the government's requirements lately getting to be tight, especially from the power quota perspective for existing data center they are asking for better than the 1.4 and for new one they are asking for better than the 1.3 in general and luckily because we have been in the industry for quite a while and then if you look at our existing data center, actually our power consumption is actually top here I would say so. So both from an expansion point of view and from the acquisition point of view, I think things are pretty much on-track from our expectation point of view. So hope that gives you some of the colors. Thank you.

Yang Liu - Morgan Stanley - Analyst

Thank you.

Operator

Our next question comes from the line of Tina Hou from Goldman Sachs. Please ask your question.

Tina Hou - Goldman Sachs - Analyst

Hi. Thank you management for your time in taking my questions. I have two questions. The first one is also regarding the recent M&A in Beijing. I'm wondering what is the deal size or the valuation you did the acquisition at.

And also the second question is in terms of your 25,000 cabinet capacity target in 2021, I am wondering how much of that already has customer commitment this year and also related to the construction pipeline, I saw that in your third quarter presentation there were two projects. Number one is SH07 and number two is E-JS Campus 02 that had around like 183,000 [Phonetic] cabinets in plan, but then these two projects were missing in the 4Q presentation. So just wondering what has happened there. Thank you.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Thank you, Tina. Good morning. Yeah. For your first question regarding on the M&A, actually we have closed those M&A in Tier 1 cities, which offers to southern cabinet that we're ready to use and our commitment to the public cloud customer, a new customer. Actually as this is a mature data center, we use EBITDA multiple to do the valuation and the valuation is in line with the market price. And for our M&A strategy, we consider the M&A as a supplement of our organic growth and currently in the market, there are two kinds of M&A targets; one, it's a brownfield one. In that case, we will only provide a premium to the seller or the developer and then to obtain those datacenters. And other one is the mature data center acquisition, which we will use, you could have multiples in the market, yeah, that's our M&A strategy.

Regarding to our 25,000 cabinet target this year, we have disclosed around 22,000 in our investor deck this year. Among that, over 60% of the cabinet we have received the pre-commitment from both the wholesale customers as well as the large-scale retail customers. I want to add more color on our large-scale enterprise customers. Besides the public cloud companies, we also see great potentials from the large-scale enterprises. For example, a popular content community and the social platform company, a leading e-commerce platform for service. We'll deliver the cabinet to the two customers this year and both the two customers are from our existing retail customer pool and some are already committed.

And regarding to the changes of certain projects, I would say for the wholesale data centers, as we sign MOUs, we should deliver based on the commitment to our customers. But for some scale retail and the traditional retail customer, we still have flexibility on the delivery, to have good match from the supply and demand side. So you can see this quarter, with this closed 22,000 cabinet, while for the gap from the 25,000 cabinet, we still have some M&A pipelines and also for the existing disclosed data centers, we still have some expansion phases in the future to match our delivery target, and in the following months we will match the - especially the large-scale customers demand and try to fix our delivery schedule. Thank you.

Tina Hou - Goldman Sachs - Analyst

Thank you very much, Sharon.

Operator

Our next question comes from the line of James Wong from UBS. Please ask your question.

James Wong - UBS - Analyst

Good morning management. Thank you very much for your time. It's James Wong from UBS. I'd just like to get a follow-on question, on the capacity pipeline. I just want to get a bit more detail around that pipeline for the next three years? I know you've 22,000 for this year. I'm just wondering for 75,000 cabinets over the next three years, where are they in terms of location and proximity to Tier 1 cities, and what proportion already have electricity and carbon quotas? So that's the first question.

The second question is around the full-year EBITDA guidance. I remember from the second quarter result, the indication was that you were expecting somewhere around 35% to 40% EBITDA growth for 2021, and I've also noticed that this first quarter, you're guiding to 66% EBITDA growth, but the full-year guidance is actually somewhat below. So I'm just wondering whether you've been potentially conservative in the full year guidance, or whether there is a bit more cost that you expect to spend over the rest of the year? Thank you.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Okay. Thank you, James. Regarding to our capacity pipelines, I shall say, we have many pipeline in terms in terms of the greenfield, brownfield and the mature data center M&As. So we are very confident to secure more resources for the delivery for the year 2022 and the year beyond. Internally, for the total 75,000 cabinet, over 60% have been secured, fully secured. Yeah, so we made good progress from the resources side. And regarding your question two about our EBITDA guidance, actually - the EBITDA guidance is mainly due to the deliveries schedule of this year, as we disclosed in the investor deck. Among the 22,000 cabinets we disclosed, around 40% will be delivered in the first half, majority will be delivered in Q2 this year, and the rest 60% will be delivered in Q4 this year. So from the delivery schedule, the [Indecipherable] will be heavily weighted in the second half. That's why we solely factor in those moving schedule in our EBITDA guidance.

And currently, we are very confident for our new [Phonetic] guidance and Tier-1 guidance, both from revenue and EBITDA perspective. Thank you.

James Wong - UBS - Analyst

Great, thank you. Thank you, Sharon. And I just - because I think, Samuel mentioned that it's getting more difficult to get resources around the Tier-1 city area. So just wondering for next year and the year after, in terms of the resources, how much of it has already been secured, whether you can provide any indication on that? Thank you.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Yes, actually for the cabinets delivered in 2020, majority was in Tier 1 cities. And this year, actually majority will be in the surrounding areas of Tier-1 city for the next two year. The surrounding areas will weight over 50% from the incremental perspective. Thank you.

James Wong - UBS - Analyst

Thank you.

Operator

Our next question comes from the line of Arthur Lai from Citi. Please ask your question.

Arthur Lai - Citigroup - Analyst

All right, thank you Sharon and Samuel, and I also want to congratulate the company's presentation, materials are getting more closure and also more data. On the page 23, my first question is, we saw the lines of ramp up and new built capacity and utilization actually increased in the quarter three and then maintained in the quarter four level at 31%. I wonder if because the capacity build in the quarter three, or is it because the demand has changed? And also can you give us some color on the 2021, how this line will go up or maintain flat. This is first question. And then second question is an audit type of question; I want to ask, under the current - the increased price of the materials, steel and also the - everything, I think everything's price is going up. Will it impact our execution and also the margin profile in the next two years? Thank you.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Thank you, Arthur. Regarding your question on the utilization rate, actually for the existing cabinet, we delivered before the year 2019, you can see the gradual increase of utilization rate for those data centers, and we can find the ramp up in the new build data cabinet, and disclose those in another utilization line. The decrease in Q4 was mainly due to the heavy delivery in Q3, around 7,000 cabinets and 2,000 cabinets in Q4. So the new delivery increased the denominator in the formulary of utilization rate. Actually, we achieved very good progress in terms of the billable cabinet. The billable cabinet increased a lot during the whole year of 2020; and in 2021, we will still use the same methodology to disclose the utilization rate. The compounds ones, the material cabinet and also the ramp up in built. For the material cabinet, the utilization rate at the end of this year will be around 80%, and for the ramp up in the new built will increase accordingly. But in certain quarters, if we deliver more cabinet, there may be pressure in that quarter. But overall the peelable cabinet will increase in this year.

And your second question is about to the construction cost, the margin in the construction cost, right?

Arthur Lai - Citigroup - Analyst

Yes.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Actually, we still have room to optimize our construction costs through the centralized procurement, as well as the supply chain management, because we delivered more cabinets in the market. So currently, we do not see any constraint or some pressure from the suppliers. We still can expect average returns from each of the datacenters. Thank you.

Arthur Lai - Citigroup - Analyst

Thank you.

Operator

Our next question comes from the line of Edison Lee from Jefferies, Hong Kong. Please ask your question.

Edison Lee - Jefferies, Hong Kong - Analyst

Hi, good morning management. Thank you very much for taking my questions. So I have two; number one, is that on the wholesale front, I know that you announced this new wholesale customer together with this acquisition. So this wholesale customer basically is acquired from the acquisition. I just want to confirm that. Number two is that, in Jiangsu, you expect to gain more local wholesale customers because of the power allocation you previously were able to obtain. And I think maybe a follow-up to that is, what are you seeing in terms of M&A opportunities, in terms of asking price, and also in terms of locations? Thank you.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Yeah, the little [Phonetic] answer of your first question is, yes, we added new customers through the acquisition. And your second question regarding to our M&A strategy. Actually, as I mentioned before, there are two kinds of M&A targets. For the [Indecipherable] majority will be in the surrounding areas, and for the Tier 1 cities, we are looking for some mature data center acquisition opportunities currently in our pipelines. Thank you.

Edison Lee - Jefferies, Hong Kong - Analyst

Have you seen any increase in asking price, or do you think the asking price has become more reasonable because of government policy to threaten to cancel private quota for unbilled projects?

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Yeah, I should say for the mature datacenter acquisition, there is a market price and we should acquire those ones in line with the market price. But for the brownfield ones, we still have bargaining rooms with the seller or developer, to provide a reasonable premium to them. Thank you.

Edison Lee - Jefferies, Hong Kong - Analyst

Sorry, just one follow-up. I just want to get some, a few from management that in terms of M&A opportunities, would you focus more on brownfield projects or mature data center projects?

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Well, that's depending on that. Sometimes, depending on the customer demand and our delivery schedule, if there are some targets, we can easily meet the customers timeline, when they consider to do the acquisition. So there will be a mix of the customer demand, the location and our NII [Phonetic] strategy. Thank you.

Edison Lee - Jefferies, Hong Kong - Analyst

Okay, thank you.

Operator

Our next question comes from the line of Kyna Wong from Credit Suisse. Please ask your question.

Kyna Wong - Credit Suisse - Analyst

Thanks for taking my questions. I have two questions, first one is actually regarding the wholesale in service MOU is [Indecipherable] 180 megawatt. I would like to ask like, do these cover only 2021 that you address around 60% of these cabinet committed, or is that your multi-year site operations and MOU and which are also covering some of your target in the 2022 to 2023 in terms of your cabinet expansions? This is the first one. And the second one is, I would like to check if the company had some kind of like policy or [Indecipherable] some kind of a target to adjust this carbon emission reduction target from the government, and how much of the power consumption will be something like green power or green energy? Or should we wait for more detail, once you publish the ESG report? Thanks.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Yeah. Regarding to your question on the client MOUs, actually the 180 megawatt was delivered in 2020, and will be delivered in this year, so a majority will be covered this this year. And currently for the cabinets where we will deliver in the year 2020 and the year beyond, we have some pre-commitment discussion with the customers, but have not signed the very solid MOUs, but in the following quarter, we expect to get very good progress and disclose those progress to the market.

Samuel Yuan-Ching Shen - Chief Executive Officer, Executive Chairman of Retail IDC

Hey Kyna, this is Samuel, let me address your second question, that's more around the ESG. As you probably know, the ESG stands for Environmental Social and Governance. And then so starting from this year, we're going to publish our annual ESG report. If we break down the ESG year by each of the buckets, we pay a lot of attention on gas emission. The datacenters definitely consume a lot of power, so we have a responsibility to drive up the renewable energy use, that's number one. Other than the gas emissions, we also pay a lot of attention on the water use, and also waste and pollution, and also because we're a big customer from a land use point of view. So how do we better utilize the land to protect the earth, that's going to be very, very important.

Aside from the environmental, we also pay a lot of attention on the social, definitely from the workforce diversity inclusion point of view. And safety management; last year COVID-19 pandemic basically tells every one of us on the planet, that we have to keep up the safety management for our taskforce and things like that. And also the way to engage with customers and to interact with the communities, is also our focus. And then from a governance point of view, the way we structure the board, the amount of the independent board members and how do we - guiding the company is moving forward, make a decision and things like that, and business conduct and also the value system. How do we keep up being transparent, from reporting point of view, and also keep up the - from the cyber attack and things like that. And so those are the areas that we are - likely, because we have been in the industry for 25 years. So we have a lot of patented practices that we want to share and report out. So my suggestion would be, please stay tuned for our coming update and that we're going to share more data. First of all, not just from the annual report point of view, but on a quarterly basis, we reporting out our progress. Thanks.

Operator

Our next question comes from the line of John Choi from Daiwa Capital Markets. Please ask your question.

John Hyungwook Choi - Daiwa Capital Markets - Analyst

Good morning Samuel, Sharon and Rene, thanks for taking my question. I had two questions. First of all, on your guidance for 2021, can you kind of elaborate, like for the capex side, you already said about RMB5 billion to RMB6 billion. Presumably, this does not factor in the M&A side. So if it does, you know, I guess this would imply that there will be more upside for both capex and M&A capacity. And my second question is about your future financing, because I know that in one of the slide decks, I think 6, you also talked about your debt structure and also our cash position. With the very aggressive task expansion the next few years down the road, can you kind of [Indecipherable] bit more details, how are you guys planning to do so? Thank you.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Thank you, James - sorry, thank you, John. Yeah. For our capex guidance amounting RMB5 billion to RMB6 billion actually around 80% were before the construction of the data center for the IT and power, and the 20% were before the land and building and M&As we have bought up knowledge [Phonetic]. So in the future, if we secure more resources for the delivery of the year 2022 or the year beyond, we have some sizable M&As, we may increase those capex guidance. And for our financing strategy, as we mentioned before, we are very prudent. We are aiming to preserve more capital to support our future expansion plans, as we have disclosed the 25,000 cabinet delivery plan each year, we will reserve more capital for those plans. In this January, we have completed the CB issuance and raising more capital. In the future at the company level, we have diversified from China, from the - both equity and debt side, and also on the project financing level, we have made very good progress with the local banks. For example, in the year 2020, we have signed project financing contracts amounting $315 million, that will support our data center construction in the future. So from the future, there will be a mix of the financings, from both the listed company level, as well as the project financing level. Thank you.

Operator

Our next question comes from the line of Hoji Jiali [Phonetic] from CICC. Please ask your question.

Hoji Jiali - CICC - Analyst

Thanks management for taking my questions. So my first question is, I see, we introduced Tencent Cloud as new logo. So how should we outlook our cooperation with Tencent in future? And second question is more in terms of the strategy side, because you have carried out your core strategy since 2020 and we have made significant progress, including multiple cloud companies. So is there any change on strategy focus placed on wholesale and retail, in terms of the proportion, what's the focus [Phonetic] weight on wholesale and retail respectively? Thank you.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Yeah, actually, as we mentioned regarding to the potential wholesale customers, they are the public cloud service provider, as well as the top Internet companies. So now for the new logo, we have very good progress with them and we also have good talks with other potential customers, to capture their future demand. So once we have very significant progress, we will disclose to the market.

And regarding to the strategy, I would look to Samuel.

Samuel Yuan-Ching Shen - Chief Executive Officer, Executive Chairman of Retail IDC

Okay. Hey, Hoji [Phonetic], nice you virtually. Yeah, last year we mentioned about, we have a dual-course engine and we continue to execute on that. As a matter of fact, one of the, one of the good progress that you have seen from the earnings release, is we signed the wholesale MOU with a popular content community and social platform company, and also the online entertainment company and things like that. Some of them are, I would say, grew up from the retail segment point of view. So if you look at our two growth engines, basically it goes hand in hand, support each other, and things like that.

From the retail side, I mentioned last year the pandemic. Most of the companies have started to accelerate their digital transformation. Therefore, a lot of the add-on services that would require, and those add-on services in the past, considered to be competitive, but [Indecipherable]. Now is like competitive requirements. So we'll continue to partner with our ecosystem, providing more, and part of the indicator you can see is, we maintained the previous baby [Phonetic] the monthly recurring revenue from a retail side point of view. And this quarter, we still maintained output for roughly about 9,000 per month, and so that's a good indicator, so that should help to answer your question. Thank you.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Thank you.

Operator

Our next question comes from the line of Chris Ko from DBS. Please ask your question.

Chris Ko - DBS - Analyst

Good morning management team. Congratulations on the strong results and thanks for taking my questions. Two questions from me. First, when I multiply your utilization rates with total capacity, the implied utilized cabinets for 4Q '20 dropped slightly Q-on-Q, could you share with us the reasons behind? And as we further expand our capacity, how should we look at the utilization rate in FY '21? And my second question is, freezing wholesale customers, incorporating more carbon-neutral related to requirements in the datacenter specifications, and would there be any impact to our margin due to this? Thank you.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Thank you, Chris. Regarding to the utilization rates for the ramp up and the new built. Actually the decrease in Q4 was due to the delivery, 9,000 delivery in Q3 and Q4, which will increase the denominator in the formulary. But from the billable cabinet perspective, we still have very good progress in the whole year of 2020. We captured the demand from both wholesale and retail customers, and we sell more cabinet, as well as more value added service to them. So that's a formulary question, so maybe we can clarify offline with you. Thank you.

Samuel Yuan-Ching Shen - Chief Executive Officer, Executive Chairman of Retail IDC

Hey Chris. This is Samuel, to answer your question again that's more like - that's more around the ESG, as I said previously. Starting from this year, we're going to provide our annual ESG report. Other than environmental, we also going to pay equal attention on the social and governance. And specifically around the environmental, because you probably know, first of all from the carbon emission point of view, China has attributed roughly about the 10% for entire world, and then in datacenters specifically in China, it's a big portion of that, roughly about 2.4% of our total power consumption. So we have the responsibility as a market leader for carrier-neutral data center providers. We have the responsibility to continue increase our renewable energy utilization mix, and also we have to continue to improve the effectiveness of our power and water usage, and so with that we are going to publish our progress and also our commitments from an annual point of view.

And having said that, every single quarter, we would like to provide a more granular data to share with all the institutional investors and industries. Thank you.

Chris Ko - DBS - Analyst

Okay, thank you.

Operator

Our next question comes from the line of Isan Zhang [Phonetic] from Nomura. Please ask your question.

Isan Zhang - Nomura - Analyst

Hi management. Thanks for taking my question. My question is about the operating expenses. As for some opex for example, sales and marketing and SG&A increased - for the fourth quarter of last year increased quarter-over-quarter and year-over-year. Just wonder what the future trend of this opex to sales ratio? And another quick question is on this new item, of the impairment of long lived asset, just wonder whether this is just only a year-end review of some prudent accounting reviews or if there is some specific reason for this item? Thank you.

Sharon Xiao Liu - Chief Financial Officer, President of Wholesale IDC

Thank you, Isan [Phonetic]. Regarding to the operating expenses, we will use the adjusted operating expenses to validate our operating efficiency. Actually for the whole year of 2020, we achieved good progress in operating efficiency, the overall total - adjusted operating expenses as a percentage of revenue was 15.7% compared to 17.5% in 2019, and this year we will still try to improve our operations in all aspect. So this year, we aim to achieve the operating - adjusted operating expenses as a percentage of revenue, the opex rate will be around 15%, nearly 1 percentage point from last year.

Regarding to the impairment of long-lived items, you are right, we take a very prudent accounting treatment for that, and this was a one-off charges in our income statement. Actually it was caused by a devaluation of assets related to the MVNO and fixed wireless business in Hong Kong, and were acquire acquired back in 2012. So this was a one-off impairment. Thank you.

Isan Zhang - Nomura - Analyst

All right. Thanks.

Operator

Our next question comes from the line of Tina Hou from Goldman Sachs. Please ask your question.

Tina Hou - Goldman Sachs - Analyst

Hi, thank you very much for taking my questions again. I have a follow-up question. Could you remind us what is the exact definition of a wholesale customer, in terms of like their cabinet size or any other measures? And then a related one on that is that, now you have more than one wholesale customers, wondering if we could get more details in terms of wholesale versus retail for your customer mix or cabinet mix and also your - potentially your wholesale MRR versus retail? Thank you.

Samuel Yuan-Ching Shen - Chief Executive Officer, Executive Chairman of Retail IDC

Tina, this is Samuel, let me try to address your questions. So first of all, if you look at the datacenter definition, honestly from a worldwide perspective, it's going to be super hard to define - from a global, I would say practice, there are five different categories, if you will. Number one being hyperscaler, and the hyperscaler tend to be, I would say in the past and probably today, tend to refer to third party cloud service providers. And number two category will be wholesale colocation, and then the wholesale colocation in the past tend to be referring to more than 10,000 racks as a ballpark number. But again that number may not be accurate year-over-year. And the 3rd one being the retail colocation and the fourth one being the carrier specific ones, and the fifth one being the enterprise data center. So these five buckets were sort of defined in the IDC industry in the past. So today, if you look at the hyperscale and wholesale colocation on one hand, versus the retail colocation and our [Indecipherable] services on the other hand. Actually in our investor presentation deck that we have a specific page, page 7 and tried to provide more granular information from our dual-core growth strategy point of view. So if I have to use our, I would say pattern, a practice point of view, to give you a better view, the wholesale customers that we're trying to targeting on those hyperscalers again in the past, tend to be more public cloud service provider, but we're seeing a lot of big data internet companies. It could be categorized as the hyperscalers, and these set of a customers tend to require a huge amount of space and power and also, first of all to support their massive scaling needs, but they also require some of the customization tailormade solutions, things like that.

On the retail side, these are the set of customers going through a decent transformation, they may not have a one bulky data center, but probably have multiple data centers, by requiring the active business continuity disaster recovery purposes, they probably need more than the pure colo, by requiring the connection services bare-metal, and also the other value added services to support their multi cloud management and things like that. So these are two very distinct segments. So that's the reason - internally we carefully separate them and then provide the services to meet their needs.

So hope that answers your question, Tina.

Tina Hou - Goldman Sachs - Analyst

Yeah. Thank you very much Samuel. Just a very quick follow-up, so when you disclose your retail MRR, right, how many customers or what are the customers that you exclude when you calculate the retail MRR?

Samuel Yuan-Ching Shen - Chief Executive Officer, Executive Chairman of Retail IDC

Okay. My understanding - we have not provided the detailed numbers of our datacenter customers. But what I can say is, we basically exclude roughly about a dozen customers, those are the wholesale customers out of the total data center customers.

Tina Hou - Goldman Sachs - Analyst

Okay. So in other words, they don't have to be getting at least 1,000 cabinets from VNET? Just maybe for example, some of the logos that you have shown on slide 7 under wholesale, and then may be a number of other big Internet customers, is that like a reasonable understanding?

Samuel Yuan-Ching Shen - Chief Executive Officer, Executive Chairman of Retail IDC

Yeah, I think that's, that's a reasonable understanding. But again, I want to make sure that the line is not very distinct, it could be blurred, because some of the retail customers when they continue to grow up, it becomes more, first of all, demanding. They have a lot of the customization needs. They can easily grow from the 5,000 racks to 10,000 racks, so it could basically grow from retail to wholesale, so that's possible. So it's not black and white. These two - first of all, the way we define the wholesale versus retail, there are fundamental differences. The cost structure differences, the skillsets differences, the niches are different. So that's the reason, we have two sets of sales force to look after the two segments. So it's not purely either/or, it could be grow up from a retail to become the wholesale customers. And we're starting to see more, I would say, support or synergy between the two segments, just in case.

Operator

I would now like to hand the conference back to the management for closing. Please go ahead.

Rene Jiang - Investor Relations Director

Thank you once again for joining the call today. If you have further questions, feel free to contact the company's IR. Bye, bye.

Operator

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VNET GROUP INC

Q4 2020

Earnings Transcript

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