Moody's Ratings raised VNET Group, Inc.'s (NYSE:VNET) corporate family rating from B2 to B1 on Thursday and retained a stable outlook. The rating agency pointed to the company's shifting business mix toward wholesale internet data center (IDC) operations, where higher margins have translated into stronger-than-expected earnings and cash flow.
Moody's noted that the wholesale IDC segment's profitability has been a primary driver behind the upgrade. The agency expects VNET to sustain solid revenue and earnings growth over the next 12 to 18 months, citing continued strong demand for data center capacity in China as a key supporting factor. Moody's projects VNET's gross revenue to expand by roughly 20% per year during that period, attributable mainly to additions in wholesale IDC capacity and improving utilization rates.
Operationally, VNET's in-service capacity climbed to 783 megawatts as of September 2025, up from 486 megawatts at year-end 2024. Utilization across the wholesale IDC business rose to over 74% overall, with mature wholesale facilities operating at around 95% utilization as of September 2025. Retail IDC utilization held steady at 64% in the same period. Moody's expects the wholesale IDC segment's contribution to total revenue to increase to more than 45% to 50% over the next 12 to 18 months, up from 24% in 2024.
On margins and leverage, Moody's forecasts VNET's adjusted EBITDA margin to improve to above 45% in the next 12 to 18 months, compared with 36% in 2024. The rating agency also expects the company's adjusted debt-to-EBITDA ratio to trend below 5.5x over the coming 12 months.
Capital spending plans remain sizable. VNET anticipates sustaining capital expenditures of RMB8 billion to RMB10 billion for 2026, in line with its 2025 level, with a sizable portion expected to be financed through additional debt. Despite the planned spending, Moody's describes VNET's liquidity as adequate. The company had RMB5.3 billion in cash and cash-like resources as of September 2025.
In November 2025 VNET completed a private REITs transaction that generated RMB800 million in cash proceeds. Moody's projects that the company's existing cash resources, together with operating cash flow and project financing, will be sufficient to cover planned capital expenditures and debt maturities over the next 12 to 18 months.
Summary of implications
Moody's upgrade reflects improving unit economics in VNET's wholesale IDC business and the company's rapid capacity build-out and commercialization. Projected margin expansion and controlled leverage over the near term underpin the agency's more favorable view.