As many in the telecommunications industry are aware, the surge in generator demand from data centers has led to extended lead times. While this benefits manufacturers, it poses challenges for wireless carriers and suppliers like CellSite Solutions.

In today’s blog we’ll cover key takeaways from the Morgan Stanley Technology, Media & Telecom Conference, highlighting what top telecom executives had to say. Our primary focus, however, will be on capital expenditures, drawing from a variety of sources, including recently filed 10-K reports.

Market Pulse: Tracking Telecom and Economic Shifts

Markets experienced another downturn, with the Fab Five losing $261 billion last week, bringing the total year-to-date decline to $671 billion. If you had told us that 2025 would open with an $800 billion gap in market value between the Fab Five and the Telco Top Five, we would have been skeptical. Yet here we are. Every Telco Top Five stock remains positive (even Comcast), while Meta/Facebook continues to be the only bright spot among the Fab Five.

One often-overlooked metric is the Relative Market Capitalization ratio, now at 13.9—its lowest point since July 2023. While the Telco Top Five may not be a “safe haven” for equities, investors who have gained nearly $7 trillion from the Fab Five since the end of 2022 are now hedging. AT&T offers a 4.09% dividend yield and has seen substantial appreciation since 2023. Verizon’s yield is 5.88%, and its market capitalization is at a two-year high. Meanwhile, T-Mobile continues its aggressive share buyback strategy, maintaining a $300 billion capitalization while paying a 1.33% dividend. These three stocks present a balance of growth and value.

On a macroeconomic level, the Bureau of Economic Analysis (BEA) recently reported a record trade deficit. A surge in steel and aluminum purchases ahead of impending tariffs played a major role in this shift, causing a sharp revision in the Atlanta Fed’s GDP projection for Q1 2025. Previously, GDP Now estimates exceeded most forecasts (3% for the Fed, and 2-2.4% for most economists). However, in just a few weeks, the GDP Now estimate has dropped dramatically, reaching -2.4% growth for Q1 as of Friday. This swing is significant given that consumer spending and business investment have not substantially declined. When economic uncertainty rises, businesses delay or halt projects. If business investment slows—though, as we’ll discuss, telecom spending remains steady—a recession could follow.

Beyond the U.S., Germany recently abandoned a long-standing fiscal policy, lifting a “debt brake” first implemented in 2009. This shift allows for increased deficit spending on defense and infrastructure. According to the Associated Press: “Leaders of the conservative Union bloc agreed with the center-left Social Democrats to exempt military spending over 1% of GDP from the debt limit, along with a 500-billion-euro infrastructure fund for civil and disaster protection, transportation, hospitals, energy infrastructure, education, scientific research, and digitization. Economists estimate that this measure, if passed, could enable a trillion euros in new borrowing and spending over a decade.”

Much like the U.S. in 2022, Europe is embracing infrastructure investment. However, Germany’s 6.2% unemployment rate—50% higher than the U.S. rate of 4.1%—should help curb wage inflation. That said, greater competition for sovereign debt financing could limit corporate borrowing options.

Meanwhile, Bloomberg’s Mark Gurman reports that Apple is facing delays with its next-generation AI-driven Siri upgrade. According to the article: “Apple had been planning to make Siri more ChatGPT-like and conversational next year. But now only the initial underpinnings for that upgrade are expected to be ready by 2026, during the iOS 19 release cycle. The actual interface that users experience likely won’t arrive until iOS 20 in 2027, the people said.”

Apple’s decision to delay reflects its commitment to a seamless user experience. However, investors will likely continue to push for faster implementation.

Telco Top Five Takeaways

Takeaways from the Morgan Stanley Conference After reviewing the transcripts of all Telco Top Five presentations from the Morgan Stanley Technology, Media & Telecom Conference, here are some key observations:

T-Mobile is strategically positioning its T-Fiber joint ventures for success. CFO Peter Osvaldik stated they are “very happy with the hand they have.” In other words, rather than acquiring additional companies, T-Mobile is prioritizing Metronet and Lumos to fuel rural expansion. As noted when the Lumos transaction was announced, T-Mobile has a significant opportunity to leverage its wireless and fiber assets to grow market share. Content delivery could pose a challenge, but lessons from their fixed wireless rollout should help them optimize Metronet and Lumos markets with minimal additional investment.

AT&T remains focused on infrastructure. CEO John Stankey emphasized the company’s construction strategy. Addressing cable competition, he stated, “It’s tough to be the highest-priced service in a market with a product that isn’t the best. I believe that’s the position they’re in when competing against our fiber.” Based on his presentation, AT&T is likely to exceed expectations in household fiber penetration and overall market share, potentially increasing by 2-3% in areas where fiber builds are completed. Stankey detailed the advantages of deploying fiber at scale (70-90% coverage) versus smaller rollouts (10-30%).

Verizon remains consumer-focused. CFO Tony Skiadas highlighted the company’s priority on improving postpaid and prepaid performance in 2025. Notably, he indicated that Verizon does not expect significant prepaid improvements until late 2025. Additionally, he revealed that only 16% of Verizon’s mobility base currently subscribes to a bundled wireless and broadband package, a figure that has remained stagnant. This presents an opportunity for Verizon to enhance its marketing efforts and drive convergence adoption.

Where is Telecom Investing in 2025?

This year, our analysis covers three major areas:

C-Band densification and cell site expansion – Analysts project that wireless carriers, particularly AT&T and Verizon, will add approximately 50,000 new sites in the coming years to improve C-Band coverage. T-Mobile and US Cellular are also expanding, primarily through co-location on existing sites.

Local network construction and upgrades – AT&T’s $22 billion budget includes $10 billion for fiber expansion within its existing footprint. Comcast and Spectrum are upgrading networks to High-Split DOCSIS 3.1 and DOCSIS 4.0. Verizon is extending its FiOS coverage, targeting 650,000 additional premises before the Frontier acquisition and nearly 1 million per year afterward.

Support systems and AI integration – The industry is prioritizing data-driven efficiency. T-Mobile and AT&T are investing in AI-powered customer service tools and streamlined network management. As telecom operators push toward greater automation, improved data quality and fiber expansion remain top priorities.

Unlike previous years, telcos are not investing heavily in new spectrum acquisitions, focusing instead on network densification and operational improvements. With 2025 shaping up to be a critical year for infrastructure investments, the telecom industry is poised for significant advancements.