Capital expenditures among competitive network operators was remarkably stable sequentially in the fourth quarter of 2011, according to my latest data update. With one exception, network operators held the rudder quite steady both on the fiber-heavy and fiber-light ends of the spectrum. This is another nail in the coffin of the idea that general operator spending cutbacks are behind the sharply disappointing winters some vendors have posted lately.
Relative Capex Trends for Competitive Network Operators
This quarter's chart of capex as a percentage of revenue now features three new entrants. I managed to find partial data for another metro fiber heavyweights (Optimum Lightpath) and then there is now one quarter's worth of data for the two hybrid ILEC/CLECs we saw added to the EBITDA margin chart last week (Windstream and Lumos). Meanwhile, Global Crossing, XO, and PAETEC's numbers have been turned off by default since two are gone and the other is now privately held and no longer supplying new data. You can view their data in context of the others by checking the appropriate box on the left.
As you can see, with one exception nearly every provider's fourth quarter capex spending was rather flat with the prior quarter whereas we often see large fluctuations. Optimum Lightpath's Q4 saw a huge short term capex surge, but it followed three quarters of light capex levels relative to the prior year and on an annual basis the change was minor. Meanwhile, Level 3's capex dropped primarily due to the inclusion of Global Crossing, which historically spent less as a percentage of revenue than they do. We can expect that to rise as their integration capex kicks in during 2012.
But rather flat doesn't mean completely flat, and there was a slight downward bias in spending among other providers. But overall capex as a percentage of revenue was well within normal operating levels both for metro-heavy operators like AboveNet, Zayo, and tw telecom and for those with more copper in their last mile diets - CBEY, Sprint, Earthlink. Cogent's capex has been down for a few quarters now, and with the Megaupload incident impacting results they will probably be even more disciplined for a quarter or two.
It's too early to say with newly independent Lumos or for Windstream following the PAETEC deal, but I'll be collecting that data from here on out.
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