AT&T infrastructure spending seen stabilizing

There may be a light at the end of the tunnel for contractors who have been forced to cut workers due to AT&T’s infrastructure spending slow down. Analysts and contractors are saying that they expect the nation’s second largest carrier to pick up the pace this quarter.
AT&T spending during the second half should be “quite solid,” according to analyst Michael Genovese of MKM Partners. He said the cuts made during the first half were not as devastating as he thought they were at first.
“I think they were actually pretty limited,” said Genovese. “I think they had to do with new 4G tower builds, but not with outfitting existing towers, and not really so much on the wireline part of the network, just primarily on the wireless side and a little bit of backhaul associated with that.”
Contractors are also hearing that spending will pick up again, but it is not yet clear whether they will be able to bring back workers that were laid off during the second quarter. Velocitel and MasTec were among those that had to lay off employees due to the cuts, and WesTower has also reportedly let workers go. A source told RCR Wireless News that Bechtel and Black & Veatch have also released workers.
“I don’t think it’s going to have a big impact on a lot of vendors,” said Genovese. “I think MasTec maybe saw some of the worst of it because they were working on construction for new towers, so I think the slowdown hit them particularly hard.”
New tower builds appear to have been hit the hardest, but LTE upgrades were also cut in some markets. One source told RCR Wireless News that in the New York metro area, AT&T cut its planned site builds by 87% and its upgrades by 92%. Other areas that were impacted include Chicago; Portland, Ore.; Florida; North Carolina; South Carolina; Tennessee; and Kentucky.
As spending resumes, some expect the focus to be on upgrading existing towers rather than on new builds. Some contractors are hearing that LTE upgrades will resume in October, but that they will not be able to bill AT&T for the work until next January.
AT&T declined to comment on reported spending cuts, but has said repeatedly that capital expenditures will be $21 billion this year. If contractors are being asked to push their invoices into next year, that could mean that the cost of some planned upgrades is coming in above projections. AT&T’s “cell site of the future” has been a lightning rod for some critics in the industry, who claim the cost of each site is significantly higher than expected.
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Image source: Stanford Linear Accelerator