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
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Using Service Quality to Drive WiFi Monetization

10|22|14   |   6:51   |   (0) comments


Live from the SCTE conference: Heavy Reading's Alan Breznick explores the forces shaping the WiFi opportunity in an interview with CableLabs' Justin Colwell and Amdocs' Ken Roulier.
LRTV Custom TV
Distributed Access Architectures – 2

10|21|14   |   8:51:00 AM   |   (0) comments


ARRIS CTO Network Solutions Tom Cloonan discusses why many if not most MSOs will continue with integrated CCAP, while addressing why some are also looking at two futuristic, distributed access architectures: Remote PHY and Remote CCAP.
LRTV Custom TV
Distributed Access Architectures – 1

10|21|14   |   9:01   |   (0) comments


SCTE Sr. Director of Engineering Dean Stoneback discusses the pros and cons of distributed access architecture (DAA) and its various forms, which range from basic Remote PHY to full CMTS functionality in the node.
LRTV Custom TV
The WiFi Road to Riches – 2

10|21|14   |   3:58   |   (0) comments


ARRIS Senior Solution Architect Eli Baruch talks about how MSOs can enable public and community WiFi through 1) outdoor access points, 2) businesses seeking to offer WiFi to customers, and 3) residential WiFi gateway extensions.
LRTV Custom TV
The WiFi Road to Riches – 1

10|21|14   |   10:15   |   (0) comments


SCTE Director of Advanced Technologies Steve Harris discusses WiFi deployments, drivers, challenges and advances, including 802.11ac, carrier-grade WiFi, community WiFi, Hotspot 2.0, Passpoint, WiFi-First and voice-over-WiFi.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Is Health the Killer App for the IoT?
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/22/2014
Drones Hover Over the IoT Sector
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/23/2014
Analysts Warn of Major NFV Gaps
Carol Wilson, Editor-at-large, 10/22/2014
Roku Raises $25M, But for What?
Mari Silbey, Independent Technology Editor, 10/23/2014
AT&T: Merger Review Halt Won't Hurt Us
Alan Breznick, Cable/Video Practice Leader, 10/23/2014
Like Us on Facebook
Twitter Feed