Uncertainty regarding the outcome of the US presidential election and the ripple effects from contracting European economies are crimping North American wireless carriers’ capital outlays this year, but they’ll manage to hold about steady year-over-year in 2012, and then surge higher in 2013, according to a new forecast from ABI Research.

Paving the way upwards in 2013 will be capital expenditures (capex) on next-generation 4G mobile broadband networks and services.

“North American mobile cellular capital expenditure is expected to hold its ground in 2012 year-on-year (YoY), with expenditure of around US$ 10 billion”, elaborated Jake Saunders, VP for forecasting at ABI Research. “In 2013, mobile capital expenditure is likely to surge 4.9% to US$10.5 billion as North American operators continue upgrading their networks”.

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Among the signs of telecompetitors’ capex growth seen by ABI are the following:

  • Verizon Wireless in 2Q announced it had discontinued investing in the expansion and capacity enhancement of its 3G network. Instead, the mobile telecom provider has allocated those resources to building out its 4G LTE coverage. While Verizon Wireless’ 2012 capex should trend flat or slightly down, the company is confident its 4G footprint will at least be equal to its 3G footprint by mid-2013, according to ABI.
  • T-Mobile USA announced it will invest US$4 billion to strengthen its 4G network in 2012 and 2013. That includes the planned launch of LTE in 2013. “Expenditures in 1Q-2012 were essentially neutral due in part to these network modernization efforts.”
  • Though AT&T continues to invest substantial amounts to upgrade its wireline networks, wireless accounted for 54% of its total capex in 1Q 2012, a US$ 454 million YoY increase, to reach US$2.3 billion.
  • Sprint’s efforts to upgrade its wireless network to LTE are driving up its capex commitments to US$ 710 million in 1Q-2012. That’s a 58% YoY increase, ABI notes.
  • Clearwire’s drive to adopt and build out LTE capacity explains some of incumbents’ renewed commitment, according to ABI. “Clearwire had started off as a WiMAX 4G operator but has seized the LTE-TDD opportunity to introduce mobile broadband services. The first phase of LTE overlay network build-up saw the installation of 8,000 sites in ‘hot zones’ in urban centers as part of the company’s strategy to provide capacity offload services to other operators.” Total 2012 capex for Clearwire is projected to total US$350 to 400 million.

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