Verizon increases capex forecast for 2013

Driven by wireless connection growth, Verizon Communications revealed in an analyst call this morning that it expects to increase its capital expenditures (capex) this year from its previous estimate of $16.2 billion to something between $16.4 billion and $16.6 billion.

The majority of Verizon’s capex will continue to go to wireless initiative. During this morning’s call, held to discuss the service provider’s second quarter 2013 performance (see “Verizon 2Q13 shows wireline and wireless growth”), Executive Vice President and CFO Fran Shammo revealed that Verizon spent $4 billion during the quarter, bringing capex levels for the year so far to $7.6 billion, up 2.5% from the first six months of 2012. Of the $4 billion spent during the recently concluded quarter, $2.3 billion went to wireless infrastructure. This brought total wireless capex for the year so far to $4.3 billion, 8.6% higher than in 2012.

These figures, of course, imply a decline year-on-year in wireline. Wireline capex for the quarter was $1.5 billion, for a six-month total of $2.9 billion – down 5.9% versus the first half of 2012.

While saying that Verizon essentially had completed its initial 4G/LTE roll out, Shammo revealed that Verizon’s previous capex estimations weren’t going to meet its present requirements. “Strong connections growth, driven by 4G LTE, and our Share Everything plans, has resulted in higher demand forecasts and a need for increased capital investment,” he said.

Most if not all of the extra spending will go toward Verizon’s wireless network, Shammo implied. Nevertheless, investors took this as good news for the optical systems industry. Stock prices for optical transport equipment vendors such as Ciena and Calix, as well as router vendors such as Juniper Networks, rose in the low single digits by late morning, reported financial information website Seeking Alpha.

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