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Analyst: US Capex to Inch Up in 2010

Ray Le Maistre
LR Cable News Analysis
Ray Le Maistre, Editor-in-Chief
1/7/2010

The combined capital expenditures of the main U.S. telecom and cable operators is set to increase slightly year-on-year in 2010, according to estimates from Avian Securities LLC .

In a research note issued Thursday, analyst Catharine Trebnick estimates a combined 2010 capex of $57.7 billion, up about 1.5 percent from 2009's projected $56.85 billion.

Both years mark a sharp decline from 2008's aggregate U.S. operator capex of $61.66 billion. (See AT&T Cuts Capex by up to $3B.)

Trebnick expects the biggest spenders in 2010 to be AT&T Inc. (NYSE: T) ($17.5 billion), Verizon Communications Inc. (NYSE: VZ) ($16.6 billion, down slightly year-on-year), Comcast Corp. (Nasdaq: CMCSA, CMCSK) ($5 billion), and T-Mobile US Inc. ($3.5 billion), though she notes that official capex targets have yet to be finalized and announced, so estimates might change. (See Verizon Boasts $17B Capex.)

While vendors will be relieved that capex isn't set for another year-on-year decline -- the 2009 spending was down about 8 percent from 2008 -- the ratio of capex to revenues is set to be much lower than in previous years.

In 2008, capex came in at about 17.6 percent of revenues for the U.S. market, but that fell to 14.6 percent in 2009 and is set to stay flat this year. Looking further ahead, the Avian analyst expects capex to dip again in 2011 to about $56.8 billion, less than 14 percent of projected operator revenues.

Trebnick expects much of the 2010 U.S. operator spending to be channeled toward 3G backhaul capacity and IP transformation projects. (See AT&T Says It's Ready for Wireless Growth.)

— Ray Le Maistre, International Managing Editor, Light Reading

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