AT&T CEO Randall Stephenson is still contemplating where his capex will be spent which will either result in a lump of coal riding a crispy Hovercraft for industry companies or a more profitable 2016.
Last year’s holiday gifts from AT&T came in the form of canceled construction purchase orders bandaged in cheerfully-colored stress-relieving bubble wrap, painstakingly selected by CEO Randall Stephenson.
And although Stephenson told investors last week that “there’s going to be a continual downward pressure on our capital spending,” possibly signaling another coal stocking stuffer, some analysts believe that AT&T is going to have to invest in its wireless network structure to remain competitive.
Although the carrier has a low enviable churn rate of about 1.3% and is most likely unconcerned about recent T-Mobile and Sprint deep discounts, Glenn Lurie, CEO of AT&T mobility, realizes the need for the carrier to invest in its network.
Lurie recently said that AT&T is going to invest an additional $3 billion in Mexico to build out an LTE network in order for them to compete. Lurie will acknowledge that to grow their revenue in the U.S., further infrastructure spending is imperative.
But how much wireless capex will be spent by AT&T and whether or not it will filter down to industry suppliers and contractors is still an analysts’ guessing game.
Recently, investment research firm Evercore estimated that AT&T might finish the year with capex down 21%.
After two years of peak spending, the big carriers cut capital expenses in 2015 by 8.1 percent, according to analysts’ estimates compiled by Bloomberg.
However, a number of mid and large contractors informed Wireless Estimator that they see a positive outlook for 2016 through work they already have in the pipeline for T-Mobile and Verizon.
“If AT&T ramps up, that would certainly make our year,” said a California contractor.
Earlier this month Verizon Chief Financial Officer Fran Shammo said that capital outlay in 2016 will be “in the neighborhood of $17.5 billion,” compared with a $17.5 billion to $18 billion range for 2015.
See: Will AT&T ramp up spending?