Verizon is going big on capex
Now let’s take a closer look at Verizon’s (VZ) future expected spending on capital expenditure (capex). Verizon has been investing heavily in capex to improve its network and buy additional spectrum for future use.
Verizon’s management has indicated that it will continue to dedicate much of its capex in 2017 to 4G (fourth-generation) LTE (long-term evolution) densification and minimal spending around 5G (fifth-generation) technology. However, over time, the carrier will consider spending more on 5G as other spending decreases.
Verizon spent $5.7 billion on capex in 4Q16 and just under $17.1 billion in 2016. As its volumes expanded post-work stoppage, Verizon dedicated much of its Wireless segment’s capex toward 4G LTE densification and its Wireline segment’s capex toward FiOS installations.
Expected capex investments in 2017
Verizon expects its capex to come in at $16.8 billion–$17.5 billion in 2017. In comparison, competitor AT&T (T) is expected to spend ~$22 billion in 2017, whereas T-Mobile (TMUS) expects its capex to be in the range of $4.8 billion–$5.1 billion, excluding capitalized interest, in the year.
Meanwhile, Sprint (S) expects its capex to be in the range of $2.0 billion–$2.3 billion in its fiscal 2016, which ended in March 2017, excluding the impact of leased devices sold through indirect channels.
AT&T and Verizon generated $39.3 billion and $22.7 billion, respectively, in operating cash flow in 2016, giving them leeway to direct more cash toward capex.