Light Reading
Analyst George Notter says that AT&T slowed its capital spending this spring.

What's With AT&T's Capex Dip?

Dan O'Shea
6/2/2014
50%
50%

Is AT&T slowing down its capital spending, or is it just "truing up"?

In a research note issued this morning, George Notter, managing director of communications infrastructure equity research at Jefferies & Company Inc. , wrote that AT&T Inc. (NYSE: T) was observed by some vendors to have slowed down its capital spending in early or mid-April. "This commentary has been quite uniform among our industry contacts that do business on the Wireline side of AT&T's capital budget," the note said. "Now, our contacts -- broadly -- are experiencing shipment/revenue declines on the order of 50-65% relative to the month of March."

If that's the case, a number of vendors -- Ciena Corp. (NYSE: CIEN), Juniper Networks Inc. (NYSE: JNPR), Adtran Inc. (Nasdaq: ADTN), Finisar Corp. (Nasdaq: FNSR), JDSU (Nasdaq: JDSU; Toronto: JDU), andAlcatel-Lucent (NYSE: ALU) among them -- could be affected. Ciena is due to report quarterly earnings this Thursday, so its call with analysts that day will bear close listening for any related commentary.

However, there are other possible explanations for the apparent decline. Notter wrote that a couple of his contacts have heard information suggesting that AT&T's spending could pick up again by next month, in which case the company simply might be "truing up" its spending in accordance with its full-year capex plan.

There also has been a perception that changes in AT&T's spending patterns could have something to do with its Supplier Domain 2.0 program. The carrier recently added more vendors to that program, and though its didn't change capex guidance, AT&T has suggested the cloud-related program "could reflect a downward bias" toward capex in the years to come. (See AT&T Adds Amdocs, Juniper to Cloud Roster.)

Notter's finding contrasts with the observation this year by the Raymond James Financial Inc. (NYSE: RJF) research team that AT&T might be spending its capital budget this year in a more linear, less seasonal fashion than it traditionally has. The team found that AT&T spent 27% of its full-year capex budget during the first quarter, counter to the traditional average of about 21%. (See Capex Trend Points to Less Seasonality – Analysts.)

AT&T knows which explanation is the right one, but it isn't saying. The telco has been strangely quiet with the vendor community about the recent spending dip.

— Dan O'Shea, Managing Editor, Light Reading

(5)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
kq4ym
50%
50%
kq4ym,
User Rank: Light Sabre
6/3/2014 | 1:47:26 PM
Re: DirecTV
Yes, it would seen that the DirecTV deal would certainly be a large influence one way or the other in coming expenditure planning. But whether this is just a coincidence or a trend that may reach massively into the future is probably a lot of tea leaf  reading for anyone outside the AT&T inner sanctum. 
KBode
50%
50%
KBode,
User Rank: Light Sabre
6/3/2014 | 8:51:39 AM
Re: DirecTV
Exactly, Carol. How precisely do you deploy 1 Gbps service to 100 cities while your CAPEX continues to decline? 
Carol Wilson
50%
50%
Carol Wilson,
User Rank: Blogger
6/3/2014 | 4:37:17 AM
Re: DirecTV
This adds more fuel to the fiery debate around AT&T's big "gigabit" plans - how are they going to add double-digit cities to the gigabit service plan without spending capex? 
R Clark
50%
50%
R Clark,
User Rank: Blogger
6/3/2014 | 3:39:42 AM
The path of truing never ran smooth
Does 'truing' make you a 'truther'?

 
DOShea
50%
50%
DOShea,
User Rank: Blogger
6/2/2014 | 9:40:37 PM
DirecTV
There's also the issue here of what effect will the DirecTV deal have on capex? Big acquisitions have a way of forcing everything else onto the back burner.
Flash Poll
LRTV Huawei Video Resource Center
The Inaugural Optical Innovation Forum in Nice

9|2|14   |     |   (0) comments


More than 170 attendees from network operators, service providers, analyst firms, and component companies from around the world convened in Nice in June for the inaugural Optical Innovation Forum, co-produced by Huawei and Light Reading.
Wagner’s Ring
Data Centers Drive Telcos Into the Future

8|28|14   |   2:20   |   (2) comments


Data centers are at the heart of key trends driving telecom -- network virtualization, the drive for increased agility, and the need to compete with OTT providers.
LRTV Custom TV
Why SPs Should Consider Cisco's EPN

8|27|14   |   5:40   |   (0) comments


Sultan Dawood from Cisco discusses Cisco's EPN, which enables SPs to build agile and programmable networks delivering new network virtualized services using Cisco's Evolved Services Platform (ESP).
LRTV Huawei Video Resource Center
Huawei’s Showcase @ Big Telecom Event 2014

8|26|14   |   2.56   |   (0) comments


SoftCOM is Huawei's framework for telecom business and network transformation. Haofei Liu, Solution Marketing Manager, Carrier Business Group, Huawei, showcases Huawei's SoftCOM architecture in this video.
LRTV Huawei Video Resource Center
Huawei @ BTE 2014: Director of Integrated Solutions on SoftCOM & NFV Monetization

8|26|14   |   4.43   |   (0) comments


Libin Dai, Director of Integrated Solutions, Carrier Business Group, discusses Huawei's SoftCOM and NFV monetization. Huawei believes that NFV monetization should be service-driven rather than network-driven, and that operators should have network transformation, service transformation and a compatible and collaborative ecosystem in place in order to deploy NFV.
LRTV Huawei Video Resource Center
Huawei @ BTE 2014: Director of US NFV Lab on CloudEdge & the Future of NFV

8|26|14   |   4.06   |   (0) comments


Sean Chen, Director of US NFV Lab at Huawei, discusses Huawei's new approach to NFV in open collaboration. Huawei believes that through Proof of Concept tests, it could help operators learn and communicate with the industry more effectively. Sean believes that successful implementation of NFV should have its values reaching to end users and discusses how Huawei's ...
LRTV Huawei Video Resource Center
Huawei's Highlights @ Big Telecom Event 2014

8|26|14   |   3.34   |   (0) comments


At the Big Telecom Event in Chicago Huawei showcases its high-level strategy, the SoftCOM architecture, which helps operators reduce the cost of ownership of their network infrastructure and generate additional revenue in the ICT service environment. Huawei showcases over 30 pilot programs from across the globe, focusing on the industry-leading commercial ...
LRTV Custom TV
VeEX – Live from the Show

8|21|14   |   5:58   |   (0) comments


An overview of VeEX Test and Measurement solutions including TX300S multi-service test set with VeExpress cloud-based management system, UX400 universal modular platform supporting 100G testing, and the redesigned RXT modular platform.
LRTV Custom TV
Transitioning CE 2.0 Networks Into the SDN & NFV Era With Telco Systems

8|19|14   |   5:19   |   (0) comments


Telco Systems' Ariel Efrati (CEO) and Moshe Shimon (VP of Product Management) discuss virtualization and how the company's new Open Metro Edge solution utilizes the SDN and NFV concepts to accelerate and orchestrate service delivery through its innovative product portfolio and software applications.
LRTV Custom TV
NFV Myths: Is NFV Still Several Years Away?

8|11|14   |   1:13   |   (0) comments


Some say that NFV (network functions virtualization) is still several years away from being implemented on mobile operator networks. This isn't the case. Operators can get started on their paths to NFV now, as this short video from Skyfire shows.
LRTV Custom TV
A New Security Paradigm in SDN/NFV

7|28|14   |   02:54   |   (0) comments


Paul Shaneck, Global Director Network Solutions for Symantec, discusses the evolving virtualized network, explaining how Symantec is leading the security discussion as it relates to SDN and NFV, and helping to ensure the network is protected and compliant.
LRTV Documentaries
Sprint's Network Evolution

7|24|14   |   14:59   |   (0) comments


Sprint's Jay Bluhm gives a keynote speech at the Big Telecom Event (BTE) about Sprint's network and services evolution strategy, including Spark.
Upcoming Live Events!!
September 16, 2014, Santa Clara, CA
September 16, 2014, Santa Clara, CA
September 23, 2014, Denver, CO
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
A survey conducted by Vasona Networks suggests that 72% of mobile users expect good performance all the time, and they'll blame the network operator when it's not up to par.
Today's Cartoon
Hot Topics
Rogers, Shaw Take Aim at Netflix
Mari Silbey, Independent Technology Editor, 8/26/2014
Utilities to Pump $11.2B Into Smart Grid – Study
Jason Meyers, Senior Editor, Utility Communications/IoT, 8/26/2014
Verizon Launches QR Code Security Solution
Carol Wilson, Editor-at-large, 8/26/2014
Nokia's Maps Land on Samsung Devices
Sarah Reedy, Senior Editor, 8/29/2014
Verizon to Launch HD VoLTE in 'Coming Weeks'
Sarah Reedy, Senior Editor, 8/26/2014
Like Us on Facebook
Twitter Feed