uploads///Telecom Q Capital Expenditure

Why Was Verizon’s Capex Guidance Reduced?

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Oct. 26 2018, Updated 8:00 a.m. ET

Verizon’s capex spending

Verizon (VZ) has increased its spending on capital expenditures (or capex) to improve its network. Verizon spent $4.2 billion on capex in the third quarter, up from $3.3 billion in the second quarter.

In the third quarter, Verizon devoted much of its capital spending on network-related investments to maintain its market leadership. The telecom company is focusing its wireless capital spending on adding capacity and densification of its 4G LTE (long-term evolution) network, which includes DAS (distributed antenna system) and small cells. The company is focusing its wireline capital spending on Fios installations.

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Expected capex investments in 2018

Verizon (VZ) expects to spend $16.6 billion–$17.0 billion on capital expenditures in 2018. Its capex plans include the commercial launch of its 5G (fifth-generation) technology, which is down from the previous guidance range of $17.0 billion–$17.8 billion. Verizon spent $17.2 billion on capex in 2017.

During the company’s third-quarter earnings call, Verizon CFO Matthew Ellis noted, “This reflects the benefits from our business excellence program which has allowed us to make all of the planned investments while aggressively advancing the 5G ecosystem and transforming our structure to deploy the Intelligent Edge Network.” 

Peer comparisons

AT&T (T) expects to spend $25.0 billion on capex in 2018, while T-Mobile (TMUS) plans to spend $4.9 billion–$5.3 billion on capex, excluding capitalized interest. Sprint (S) expects its cash capex to be $5.0 billion–$6.0 billion in fiscal 2018, which ends in March 2019. This capex figure excludes leased devices.

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