Tuesday, June 29, 2010
Capex and Wall Street
From my perspective, this excerpt from a recent (June 16) Reuters article offers a fascinating glimpse into Wall Street’s mindset regarding the impact of current network investments on long-term market cap:
"Investors could be surprised by capex plans over the coming years and for a sector still generally mistrusted to allocate capital optimally, this is likely to lead to volatility in the shares," said James Gautrey, telecommunications analyst at Schroders. "Until I see more concrete evidence that the companies will generate a decent return from their fiber/mobile investments, there are better opportunities elsewhere.”
We’ve all heard about the explosion of mobile data traffic and subsequent requirement for network expansion (Apple sold another 1.7 million iPhone’s over the weekend). Which is precisely why Wall Street’s radar is so attuned to capex ratios. Challenging Wall Street perceptions such as Mr. Gautrey’s will require carriers to find new and better ways to optimize equipment planning, sourcing and disposition, and extend the overall value of their network investments. At the end of the day, far too many assets are still left in the dust before they’ve even come close to reaching their full revenue potential.
