Despite a flurry of news relating to 5G progress, gigabit cable deployments, as well as continued momentum of public cloud revenue, capex trends across key service provider end markets appear to be moderating, according Barclays’ Amir Rozwadowski in his “Roz Report.” The report highlights Q3 2018 capex and revenue trends that have generally been favorable, but also flags tempered spending commentary by a number of key vendors.
“Traditional service provider spending has been better than feared,” Rozwadowski said. “The consolidated capex of AT&T, Verizon, Charter and Comcast rose to $14.4Bn in 3Q18, up 2% Y/Y. This increase was led by AT&T with capex of $5.7B, which increased 15% Y/Y. Verizon, on the other hand, reported capex of $4.2Bn, which fell (2%) Y/Y. Both companies touted progress with 5G initiatives and highlighted upcoming deployments. From a cable perspective, capex fell to $4.5Bn, down (7%) Y/Y, due to decreased spending on CPE and the functional completion of DOCSIS 3.1 roll-outs,” he said.
According to Rozwadowski, capex for Amazon, Google, IBM, and Microsoft increased to $13.1Bn in Q3 2018, up 38% Y/Y, but slowing from growth of 98% Y/Y and 53% Y/Y in Q1 2018 and Q2 2018, respectively. He attributed slowed spending to excess capacity following robust builds in 1H18 as well as delays ahead of 400 Gb availability in mid- to-late 2019.
Infrastructure providers had relatively solid results Rozwadowski said. “Ericsson, Nokia, Crown Castle and Juniper each reported better than expected revenue trends. Ericsson and Nokia benefitted from early 5G traction, particularly in North America. Crown Castle results indicated healthy macro site and small cell demand,” he said.
However, questions on how long the “goodness” will last are likely to linger, he said.
October 30, 2018
