Infrastructure news: Carrier spending update

Investment in wireless infrastructure is a big part of capital spending for both Verizon and AT&T, and both carriers spent more during the most recent quarter than analysts had expected. Verizon’s total Q2 capital spending was $4.3 billion, and AT&T spent a solid $6.0 billion. AT&T has said repeatedly that it’s committed to the “$21 billion” range for the full year, and so far it has spent $11.8 billion, leaving $9.2 billion for the second half if the carrier sticks to its plan.
Verizon’s year-to-date capital expenditures total $8.45 billion, and the carrier is forecasting total spending of $16.5 billion to $17.0 billion for the full year. Analyst Simon Leopold of Raymond James does not expect a year-end spending surge from Verizon, and he thinks the carrier’s second half spending will favor wireless equipment vendors more than makers of routing and network gear. He notes that in previous years, spending has often been “back-end loaded” but does not expect that from Verizon this year.
Jennifer Fritzsche of Wells Fargo Securities met with Verizon this week at the firm’s Small Cell Symposium. She said Big Red looks like the current leader when it comes to DAS-related spending.
“The majority of the integrators and DAS providers we spoke with said VZ has been busier than any carrier in this effort as it further densifies its network,” said Fritzsche in a research note.
Some contractors have noted a slowdown in spending by AT&T, but many find that T-Mobile US is picking up the slack. This is a welcome development in light of the possibility that Sprint owner Softbank could make a bid for T-Mobile. Two years ago when AT&T tried unsuccessfully to buy T-Mobile US, some spending was put on hold while the operators waited on the regulators.
“We’ve seen this before and how things slowed down,” said recruiter Paul Harris of GRN Blackhawk. “I think that everyone has that relatively fresh in their mind.” But this time, the companies involved know regulatory approval is far from certain. Much more certain is intense competition and heavy investment from Verizon and AT&T, and that argues for continued network investment by both Sprint and T-Mobile US.
“Right now T-Mobile is continuing to spend and continuing to build out their network, so they’re as busy as ever,” said Blair Bode, vice president at recruiting specialist Kineticom. Ron Deese of TelForce Group also said that Sprint and T-Mobile US are at “full stream.” In addition, a major equipment vendor told RCR this week that the possibility of a Sprint/T-Mobile merger attempt has not impacted spending.
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