So far in 2016, network expansion spending overall, despite an initial push for 5G that quickly became an arms race, is about 19 percent lower than industry analysts first estimated. Capital expenditure plans for the year for all four carriers are down at least $1 billion year-over-year, with Sprint going as far as to decrease their planned expenditure by $1.5 billion in 2016. It is in this stymied environment that Verizon workers, particularly on the landline side of things, have chosen to go on strike to protest things like poor contract terms and alleged corporate tax evasion. Industry analyst firm Evercore believes that the strike may be hitting Verizon's bottom line hard enough to have an effect on network expansion spending, even as the 5G arms race begins to pick up speed.
Along with a general pulling back of capital expenditures during a crucial time when zealous network spending would make more sense, carriers are looking to less traditional strategies, like small-cell backhaul, for network expansion and densification. While Verizon has not been completely left out in the cold during this revolution, being among the first to conduct high-speed 5G testing, worries that the ongoing strike in their landline sector could be cutting into their free capital abound. Verizon, however, has assured investors that this is not the case and that there is no cause for alarm. CFO Fran Shammo took time during the company's quarterly investor relations call to specifically address these matters. Analysts and industry insiders, of course, were not completely convinced.
Evercore's recent statement made their position on the matter quite clear; "...recent channel checks indicate a growing concern that the strike from Verizon's wireline unions -- which is drawing away resources from even the company's wireless operations -- may also be impacting the pace at which the nation's largest carrier is able to deploy capital." With the strike ongoing and having only started recently, of course, there isn't sufficient evidence at this point to say just how much it has been affecting Verizon's bottom line and if such effects have influenced their spending strategies in any significant way. As we approach the midpoint of 2016's second quarter, only time will tell at this point whether Verizon is really in trouble and, if so, whether they'll be able to pull themselves out of that trouble and put things back into a better standing then they are in currently.