Despite sky-high expectations, wireless capital expenditures show signs of sluggishness

At the start of 2018, a wide array of analysts predicted a dramatic upswing in the amount of money wireless network operators would spend improving their networks this year compared with spending in previous years. Indeed, the analysts at Deutsche Bank Research in February predicted nationwide carriers would increase their overall capex during 2018 by 14% over last year to $30.5 billion—which they pointed out would be the market’s biggest capex figure since 2014. And if anything, those forecasts seemed low in June, when the analysts at Oppenheimer raisedtheir capex figures for Verizon (by 2% to $18.2 billion) and AT&T (by 3% to $25 billion). 

Now, though, the capex situation in the US looks decidedly less rosy. Sprint, Verizon and AT&T have all reduced their overall capex numbers for 2018. The operators cite a variety of reasons, from timing issues to more efficient network technologies. But the ultimate result is the same: Where there was once excitement, now there’s a decided sense of pragmatism.

“Dare we say it: Capex intensity is declining,” wrote the analysts at Wall Street research firm Scotiabank in a recent note to investors. The analysts cited Verizon specifically, which last month said it now expects to spend a total of between $16.8 billion and $17 billion on its network during the course of 2018—a range that is down notably from the $17 billion to $17.8 billion the operator gave at the beginning of the year.