Are operators 'turning the corner' on 5G spending in the US?Are operators 'turning the corner' on 5G spending in the US?

AT&T, Verizon and T-Mobile have all slowed their spending on 5G equipment in the past two years. But new data suggests that could change.

Mike Dano, Editorial Director, 5G & Mobile Strategies

October 16, 2024

4 Min Read
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(Source: Andrew Paterson/Alamy Stock Photo)

According to a handful of data points, US wireless network operators might finally be reopening their pursestrings, ending more than a year of sluggish spending on 5G equipment.

However, it's not clear when the spending freeze might thaw. Nor is there any expectation that network operators like AT&T, Verizon or T-Mobile will ever return to the heady days of 2022, when their 5G spending reached a fevered pitch. That was the year all three of the big wireless network operators in the US sought to put their new midband spectrum holdings into use by buying record numbers of 5G radios.

"Tower demand remains muted but appears to be turning the corner," wrote the financial analysts at KeyBanc Capital Markets in a recent note to investors.

Demand for space on cell towers is a key indicator in the 5G industry because operators buying new 5G radios from the likes of Nokia, Ericsson or Samsung must mount those radios onto cell towers to put them into use.

"Catalysts appear to be forming," continued the KeyBanc analysts, pointing specifically to big cell tower operators like SBA Communications, Crown Castle and American Tower. "We think that among T-Mobile's capex bottoming, Dish receiving an FCC extension on 5G build-out targets and pursuing the separation of its satellite business while securing new financing, AT&T's ORAN deployment accelerating, and Verizon likely accelerating C-band to pursue higher FWA [fixed wireless access] targets, there are catalysts forming and reasons to believe capex/leasing expectations are at their trough."

Other analysts agreed.

"The carrier leasing environment is improving," wrote the financial analysts at MoffettNathanson in a recent note to investors, based on their recent meetings with executives in the industry. "It makes us incrementally more positive on the towers, since many investors have generally been skeptical of an improvement in the leasing environment and/or have been waiting for evidence of an inflection before becoming more constructive."

And this week 5G equipment vendor Ericsson reported its own successes in the North American market. 

"North America continued to be very strong and grew by 55% year-over-year driven by and helped by strong deliveries related to our recent AT&T contract win that's now coming into delivery phase," Ericsson CEO Borje Ekholm said during his company's quarterly conference call, according to Seeking Alpha. "But we also see selective network investments by other large customers."

Ericsson is now the sole big 5G supplier to AT&T following the companies' open RAN agreement last year.

Officials from Ericsson declined to comment on the company's business with each of the big US wireless network operators. But analysts speculated that AT&T, Verizon and T-Mobile each have reasons to ramp up their 5G spending.

AT&T focuses on adding Ericsson

AT&T is in the midst of tearing out hundreds of thousands of Nokia radios from its network and replacing them with equipment from Ericsson and potentially others. AT&T's wireless network stretches across an estimated 73,000 US cell towers, and each of those towers could hold a half dozen radios or more.

AT&T is also likely keen to put its C-band and 3.45 GHz midband spectrum holdings to use across the US.

Ericsson officials attributed much of the company's recent success to AT&T's upgrade efforts, but hinted AT&T wasn't alone in spending. "The increase in North America is broader than just one contract," Ericsson's Ekholm said.

T-Mobile's eyes coverage commitments

T-Mobile may raise spending due to federal coverage requirements, according to the MoffettNathanson analysts. "Our understanding is that T-Mobile is looking to meet certain commitments that it made to the FCC in tandem with the Sprint transaction by year-end 2025," they wrote.

For its part, T-Mobile continues to tout its networking investments, including its plans to launch 5G Advanced technology later this year. The company also recently expanded its fixed wireless ambitions.

Verizon expands in rural areas

Finally, MoffettNathanson points to Verizon's expansion of its rural coverage.

Indeed, Light Reading reported last year that Verizon had launched a new program designed to expand its signal into more areas, a move that was in part a competitive response to T-Mobile's 5G successes.

Separately, the analysts at KeyBanc speculated that Verizon will increase spending on its network in order to expand its own fixed wireless business. The financial analysts at TD Cowen recently predicted Verizon would increase its fixed wireless goals to 7 million to 8 million customers, up from its current target of 4 million to 5 million.

Verizon, AT&T and T-Mobile may provide insights into their spending strategies next week, as they report their quarterly results.

About the Author

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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