MasTec is seeing the fruits of its efforts to diversify business and reduce its exposure to the oil and gas markets, MasTec CEO Jose Mas said during the company’s first quarter earnings call. From the end of 2021 to the end of 2023, the general contractor expects to more than double its non-oil and gas market revenue.
The communications segment revenue has been a beneficiary of the diversification effort. It is expected to grow to approximately $3.6 billion this year compared to just under $2.6 billion in 2021, which is a nearly 40 percent increase over the last two years. The company has also experienced growth in other verticals, including clean energy and infrastructure and power generation and delivery.
“While we continue to face some challenges around supply chain, permitting and higher interest costs, the long term demand of our services is incredibly strong across all of our segments,” Mas said. “We believe the transition we’ve made into diversifying our services, coupled with the macro trends, particularly in both the broadband infrastructure and energy markets, gives us excellent visibility into future revenue and earnings growth.”
MasTec’s communications revenue for the quarter was $807 million, a 21 percent year over year increase. The backlog for the segment at quarter end was $5.6 billion which is a record level. MasTec said future growth will be the result of 5G requiring networks to be upgraded and expanded to meet the demand for data and internet usage.
Although carriers are allocating dollars for 5G build out, Mas said progress in the build out has been slowed by questions surrounding how fast speeds need to be for a carrier to be competitive in the market. “The 5G build out has gone much slower than most expected,” he said. “We’re still in the very early stages of 5G deployment, and I still think the best years of wireless are yet to come. I think we’re gonna see a substantial increase in capex over the coming years.”
What’s driving the communications business today is on the wired side, with the deployment of broadband infrastructure across the country, according to Mas. MasTec is also experiencing a significant amount of demand related to fiber expansion, which the company expects to increase in the future as money is distributed from government funding programs. The fiber deployment, in turn, will fuel 5G, he said.
“While we are currently seeing the impact of funding related to the Rural Digital Opportunity Fund, the amount of federal grants available to the industry are going to exponentially increase with the infrastructure bill, and Inflation Reduction Act,” Mas said. “As more fiber gets put into the ground, we’re gonna see continued investments in 5G.”
As for the future, Mas believes the wireless infrastructure industry will have plenty of work on its hands. “Not only must new equipment be added to existing cell towers, millions of new small and micro cells must be built and connected, including fiber and power. All of these new points of presence not only need to be built, but they will require ongoing maintenance and service, creating a significant long term maintenance opportunity,” he said.
By J. Sharpe Smith, Inside Towers Technology Editor
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