Simpson Thacher & Bartlett
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icbc tower, 35th floor 3 garden road, central hong kong
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telephone: +852-2514-7600 facsimile: +852-2869-7694
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Direct Dial Number +852-2514-7660 |
E-mail Address dfertig@stblaw.com | |
August 15, 2023
CONFIDENTIAL AND VIA EDGAR
Division of Corporation Finance U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 |
| Attention: | Mr. Dan Morris |
| Ms. Jennifer Thompson | |
| Ms. Kathleen Collins | |
| Ms. Megan Akst |
| Re: | GDS
Holdings Limited Form 20-F for the Fiscal Year Ended December 31, 2022 Filed April 4, 2023 File No. 001-37925 |
Ladies and Gentlemen:
On behalf of our client, GDS Holdings Limited, a company organized under the laws of the Cayman Islands (the “Company”), we respond to the comments contained in the letter from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), dated August 8, 2023 (the “August 8 Comment Letter”) relating to the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2022 filed with the Commission on April 4, 2023 (the “Annual Report”).
Set forth below are the Company’s responses to the Staff’s comments in the August 8 Comment Letter. The Staff’s comments are retyped below in bold italic font for your ease of reference. The Company respectfully advises the Staff that where the Company proposes to add or revise disclosure in its future annual reports on Form 20-F in response to the Staff’s comments, the changes to be made will be subject to relevant factual updates and changes in relevant laws or regulations, or in interpretations thereof.
michael j.c.M. ceulen marjory j. ding daniel fertig adam C. furber YI GAO MAKIKO HARUNARI Ian C. Ho JONATHAN HWANG anthony d. king jin hYUK park Erik p. wang christopher k.s. wong
resident partners simpson thacher & bartlett, hong kong is an affiliate of simpson thacher & bartlett llp with offices in: |
New York Beijing Brussels Houston LONDON Los Angeles Palo Alto SÃO PAULO TOKYO Washington, D.C.
Simpson Thacher & Bartlett
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Division of Corporation Finance U.S. Securities and Exchange Commission |
-2- | August 15, 2023 |
Form 20-F for the Fiscal Year Ended December 31, 2022
Notes to Consolidated Financial Statements
Note 25. Major Customers and Suppliers, page F-59
| 1. | We note your proposed revised disclosures in response to prior comment 4. Please further revise to clarify that Contracting Customer C represents the direct sales portion of revenue from End User Customer One. Also, clarify that a portion of revenue from the two significant End User Customers is also reflected within each of the Contracting Customers revenue percentages.. |
In response to the Staff’s comment, in the Company’s future annual reports on Form 20-F the Company will provide further information to clarify the corresponding relationship between the Company’s major contracting customers and major end user customers. A sample of the proposed revised disclosure in Note 25 to Consolidated Financial Statements for the periods ended December 31, 2020, 2021 and 2022 is set forth in Annex A.
* * *
Simpson Thacher & Bartlett
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Division of Corporation Finance U.S. Securities and Exchange Commission |
-3- | August 15, 2023 |
If you have any question regarding the Company’s responses to the Staff’s comments, please do not hesitate to contact me at +852-2514-7660 (work), +852-6640-3886 (mobile) or dfertig@stblaw.com (email).
| Very truly yours, | ||
| /s/ Daniel Fertig | ||
| Daniel Fertig |
Enclosure: Annex A
| cc: | William Wei Huang, Chairman and Chief Executive Officer | |
| Daniel Newman, Chief Financial Officer | ||
| Jamie Gee Choo Khoo, Chief Operating Officer | ||
| Andy Wenfeng Li, General Counsel and Company Secretary | ||
| GDS Holdings Limited | ||
| Kevin Huang | ||
| Vivien Yang | ||
| KPMG Huazhen LLP |
Annex A
Comment 1
25 MAJOR CUSTOMERS AND SUPPLIERS
The Company defines “end user customers” (or “customers”) as the end users of the Company’s services. The Company defines “contracting customers” as parties with which the Company enters into sales agreements, including (i) the Company’s end user customers that directly enter into sales agreements with the Company; and (ii) intermediate contracting parties that, at the request of the Company’s end user customers, enter into sales agreements with the Company, in which case the Company may provide services to the end user customers through such agreements.
During the years ended December 31, 2020, 2021 and 2022, the Company had the following contracting customers which generated over 10% of the Company’s total net revenues:
| Years ended December 31, | ||||||||||||
| 2020 | 2021 | 2022 | ||||||||||
| Contracting Customer A | 1,347,165 | 1,736,295 | 1,895,877 | |||||||||
| Contracting Customer B | N/A | 873,378 | 1,595,777 | |||||||||
| Contracting Customer C | 674,621 | 785,528 | 1,130,799 | |||||||||
| Contracting Customer D | 847,620 | 964,414 | 1,031,102 | |||||||||
During the years ended December 31, 2020, 2021 and 2022, the Company had the following end user customers which generated over 10% of the Company’s total net revenues:
| Years ended December 31, | ||||||||||||
| 2020 | 2021 | 2022 | ||||||||||
| End User Customer One | 1,511,977 | 1,850,523 | 2,341,346 | |||||||||
| End User Customer Two | 1,173,696 | 1,735,536 | 1,857,369 | |||||||||
During the years ended December 31, 2020, 2021 and 2022, the Company generated a portion of the net revenue attributable to End User Customer One and End User Customer Two through sales agreements entered into with them directly; during the same years, the Company generated the remaining portion of the net revenue attributable to End User Customer One and End User Customer Two through sales agreements entered into with intermediate contracting parties, including Contracting Customer A, Contracting Customer B, and Contracting Customer D.
During the years ended December 31, 2020, 2021 and 2022, the portion of net revenue generated by the Company from End User Customer One through sales agreements entered into with it directly is represented by the revenue listed under Contracting Customer C; during the same years, the portion of net revenue generated by the Company from End User Customer Two through sales agreements entered into with it directly is not disclosed as a separate line item under contracting customers above as it constituted less than 10% of the Company’s total net revenues in each year.
During the years ended December 31, 2020, 2021 and 2022, the numbers of major suppliers of the Company were two, one and one, respectively, from whom the purchase amounts from each of them accounted for over 10% of the Company's operating expenditures. Severe impact can result from total or partial loss of the business relationship.