Fourth quarter reports may be coming up soon, but don’t expect to see any big jumps in capex spending for the quarter, or for that matter in any of the quarters coming up in 2017 and 2018.
The investment cycle driven by LTE is now over and global wireless telecom capex is expected to more or less stagnate through 2017 and 2018, according to a new research note from IHS Markit.
The firm said the LTE boom is now over, marking the end of a five-year investment cycle that ran from 2011 through 2015 and was characterized by synchronized global movement and yearly growth thanks to “fewer but larger service providers that enjoy economies of scale.”
This year, however, was the start of a new period of out-of-sync investments worldwide, IHS said, which will yield flat growth over the next two years. Things are expected to pick back up in 2019 as 5G-related spending picks up, but IHS noted the major investments may be in fiber-based fixed broadband and backbone network technologies at first.
“We expect global telecom capex to increase at a five-year (2016-2020) compound annual growth rate (CAGR) of 0.8 percent, reaching US $353 billion in 2020,” IHS predicted. “This forecast is based on the assumption that an economic recession or other major event will not derail our model over the next four years.”
Stateside, Wells Fargo earlier this month forecasted Sprint will lead a modest capex boost, possibly raising its spending levels from around $3 billion in fiscal 2016 to $5 billion or more now that it’s liquidity position has improved. The firm also said AT&T and Verizon could also bump up their capex in the coming year as they look to deploy AWS-3 spectrum and continue small cell densification efforts, respectively. T-Mobile’s capex levels are expected to remain stable in 2017, Wells Fargo said.
