A newly released report expects carriers worldwide to increase their capital spending in coming years despite slower revenues.
The Carrier Economics Report from California telecom research firm the Dell’Oro Group suggested that capital expenditures by mobile operators would increase from 2017 to 2020 — even though their revenues would remain flat over that span.
Analysts also predicted that operators would struggle to find new revenue streams in coming years.
The report, which assessed revenue, spending and capital intensity trends for more than 50 carriers, said larger data plans and preparations for 5G would nonetheless spur increased investment by the wireless industry.
“After three consecutive years of declining capex, short-term and near-term market expectations have shifted up,” Dell’Oro Group senior director Stefan Pongratz said in a statement. “Here in the U.S., we maintain the view that conditions are stabilizing and both capex and capital intensity will continue to trend upward.”
AT&T and Sprint were projected to show some of the strongest spending increases, along with European carriers Orange and Deutsche Telekom, Russia’s Megafon and Etisalat in the United Arab Emirates.
The report said recent U.S. tax changes, in particular, would translate to increased capital spending by operators.
AT&T vowed to spend $1 billion in the wake of the legislation’s passage. Although the company already paid taxes at a far lower rate than the previous corporate rate of 35 percent, analysts suggested it could still benefit from increased cash flow.
Dell’Oro analysts also noted that AT&T is set to begin deploying infrastructure to support the FirstNet nationwide public safety network.
Sprint, meanwhile, was considered likely to invest again. The nation’s No. 4 carrier continues to cut costs in an effort to the fund the needed improvements to its network.
Filed Under: Carriers
