Verizon Capex Seen Favoring Wireless, Distributed Antenna System Vendors

Verizon Communications’ decision to sell wireline assets to Frontier Communications seems to have freed up more capital for investment in wireless. The company said wireless capital spending totaled $2.9 billion in the quarter and $8.5 billion year-to-date, up 8.4 percent from a year ago. Analyst Simon Leopold of Raymond James sees Verizon investing as much as $11.7 billion in its wireless network in 2015, with a focus on network densification. Simon said that some investment will shift toward wireless as a result of the landline asset sales.

“Verizon is unlikely to make material investments and upgrades in these footprints before the sale; the cash generated will likely be concentrated towards wireless improvements, leading to a shift in capex towards wireless,” Leopold wrote in a research note. “We consider the news positive for CommScope on wireless densification; neutral for Alcatel-Lucent, Arris, Ciena, and Ericsson; and negative for Dycom and Juniper based on capex mix shifts.” CommScope is seen as a beneficiary because it is the world’s largest vendor of distributed antenna system (DAS) equipment, and Verizon Wireless is focusing on DAS and small cells as it works to densify its network.