After falling short of expectations again for the third quarter, mobile carriers in the U.S. will be investing more through capital expenditures (CapEx) spending going into the fourth quarter for 2017. That’s according to Senior Equity Analyst Robert Gutman at Guggenheim Securities, who says that the increase in investments will be up by 21.2 percent from the end of Q3 2017 through Q4 2017. For those who may not be aware, capital expenditures are generally defined as funds used by a company or organization in order to obtain physical assets. CapEx results for Q3 were down 12.4 percent from the expectations and 8.1 percent from Wall Street estimates, but that it is an improvement year-over-year, according to Gutman. Last year, CapEx investments were 15.1 percent below estimates. Those shortcomings are not necessarily anything new, or a point of concern, according to Gutman.
The acceleration in investments themselves, meanwhile, will be great for companies responsible for network towers. That seems to indicate that CapEx improvements moving into Q4 will stem largely from a continued push to expand networks and 4G LTE, as well as a more focused effort to shift toward preparations for the implementation of 5G network technologies. Gutman points to AT&T by way of example, stating that the provider’s deployment of 60MHz and 600MHz spectrums should “drive additional spending on top of ongoing network densification.” Meanwhile, he says, 2018 guidance from Crown Castle, a U.S.-based broadcasting infrastructure company is, unsurprisingly, conservative. However, investments from AT&T and others could begin a new “long-term” CapEx spending cycle in the second half of 2018, according to the industry analyst. Sprint has also indicated that it will be significantly increasing its capital expenditures for the next fiscal year which is another basis used for the forecast detailed above.
Of course, it almost goes without saying that continued CapEx investment in tower infrastructure would not be a sole benefit to tower infrastructure companies. If Gutman’s predictions about a long-term investment cycle turn out to be accurate, wireless subscribers and customers should note improvements to their mobile experience as well. Investment in network infrastructure should alleviate some of the problems associated with network congestion and lead to more coverage across the country. At very least, an increase in CapEx investments, specifically spending associated with tower-specific firms like Crown Castle, should help carriers keep up with the ever-increasing demand for data from consumers.