2016 Carrier Spending is Iffy

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Nervous. That’s what any brass at a company relying on 2016 infrastructure work from the top U.S. carriers ought to be. It appears that the fog of 2015 that has kept carrier spending grounded will drift into the new year as the big four – AT&T, Verizon, T-Mobile and Sprint – continue moving toward less expensive software-driven network while completing wireless upgrades.

The big guys cut capex spending in 2015 by 8.1 percent, notes Scott Moritz/Moritz Dispatch using estimates compiled and published by Bloomberg this week. Moritz and others have suggested, “the belt tightening isn’t over.”

Moritz reports AT&T Chief Executive Officer Randall Stephenson told investors Tuesday “there’s going to be a continual downward pressure on our capital spending.” Verizon Chief Financial Officer Fran Shammo said last week that capital outlay in 2016 will be “in the neighborhood of $17.5 billion,” compared with a $17.5 billion to $18 billion range for 2015. In October, Sprint said it is targeting a $500 million cut in equipment spending next year. 

The thinking is spending on some older-fashioned hardware will shift to new tech equipment and such companies as Cloud-switcher Brocade Communications and wireless gear maker Affirmed Networks will benefit.

AT&T’s Stephenson isn’t the only business titan to be concerned about the near economic future. Reuters points out that a CEO survey last month found 60 percent of 140 CEO’s questioned said they expected sales to increase over the next six months, down from 63 percent during the previous quarter.

And the proportion of CEOs who said they expected their capital spending to decrease over the next six months rose to 27 percent from 20 percent in the third quarter. In that survey, Stephenson said the projected decline in capital investment was most concerning. “Capital spending as a percentage of the U.S. economy is at historically low levels. We’re hampering and we’re burdening capital investment in the U.S.”

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