Wireless Capex to Increase in 2020, but Don't Expect a 5G Windfall – Analysts

Analysts at Jefferies expect capital expenditure (capex) by mobile carriers to grow by 2-4% in 2020, but have told vendors not to expect the steady, industry-wide move to 5G to lead to a drastic growth in network spending.

The analysts expect that 2020 spending will reflect:

  • Continued spending by AT&T on its FirstNet 4G LTE nationwide network for first responders.
  • Ramp in infrastructure deployment by Dish as it initially rolls out its narrowband IoT and 5G network.
  • The resolution of $26.5 billion merger of T-Mobile and Sprint.

    AT&T has so far predicted it will spend $20 billion on capex in 2020, down from an expected $23 billion in 2019. Verizon has reported that it will spend $17 billion to $18 billion on capex. T-Mobile has estimated it spent $5.8 billion to $6.1 billion on capex in 2019. AT&T and Verizon will announce their fourth-quarter results at the end of this month. T-Mobile will follow with results in early February, and Sprint will announce its fiscal 2019 numbers in March.

    Don't expect 5G to stimulate capex spending any time soon though. "[The] wireless service industry is hitting maturity and ROI [Return on investment] with 5G capex is poor for at least 2+ years until business models develop," Jefferies analysts write in a report on capex across cable, wireline and wireless carriers released this week.

    The Jefferies team predict that enhanced wireless speeds, fixed wireless access, augmented and virtual reality, and cloud-based gaming will start to come into focus as business models in the 2020 timeframe. IoT and autonomous driving will come slowly over the horizon by 2023.

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