As the company works to deploy additional spectrum and move toward 5G technology, AT&T will likely buy more antennas from the likes of CommScope and Kathrein, according to BTIG analyst Walter Piecyk.
“We expect antenna manufacturers CommScope and Kathrein to see a notable ramp in order flow from AT&T in the second quarter, after the initial, but limited, order flow at the end of last year,” Piecyk wrote in a post from BTIG, a Wall Street analyst firm. “This is consistent with the commentary of CommScope management on their last quarterly call and supported by recent checks.”
Piecyk pointed to commentary from CommScope’s CFO, who in February said that the company expects “meaningful” revenue from AT&T’s FirstNet build-out in the second quarter of this year.
“We also continue to believe that CommScope will continue to maintain leading share at AT&T, although Kathrein is well positioned to grab one-third of that order flow if it can execute,” Piecyk added.
Those comments largely dovetailed with guidance provided by AT&T executives as far back as a year ago. Indeed, AT&T’s John Donovan said in May of 2017 that the operator was gearing up to deploy services on up to 60 MHz of spectrum nationwide—spectrum that includes the 20 MHz of 700 MHz spectrum AT&T obtained from FirstNet, as well as AT&T’s WCS and AWS spectrum holdings.
“Now that we’re embarking on this unlimited phase in the industry, we’re going to be out there touching an economy to deploy all that at once, and that’s the intention that we have,” Donovan said last year. “We’ll deploy 700 (MHz) that came from FirstNet, the WCS and the AWS spectrum in each of the markets we go in, all at the same time.”
Moreover, AT&T has said it will launch mobile 5G services in a dozen U.S. cities this year. And AT&T appears to be putting its money where its executives have promised.
The carrier in January of this year said it expects to spend up to $25 billion this year in capital expenses, a figure notably higher than most Wall Street estimates and a significant increase from the $21.6 billion in capex it spent in 2017. (To be clear, AT&T isn’t alone. The analysts at Wall Street Research firm Barclays recently said that they expect combined capex among Verizon, AT&T, T-Mobile and Sprint to rise by 10% this year, which they said would be the largest increase in the past five years.)
Although AT&T hasn’t provided many details about its vendors for its 700 MHz, WCS and AWS spectrum build-outs, or its 5G deployment efforts, suppliers like CommScope and Kathrein may well cash in on AT&T’s loosened purse strings.