T-Mobile, AT&T and Verizon are all investing billions of dollars to upgrade their 5G networks with IF spectrum. The initial results of these efforts are impressive: new research shows that the 5G speed provided by all operators to customers across the United States has been significantly improved.

However, Verizon and T-Mobile have indicated that these projects will end next year, and AT&T’s expenditure may also decline. Therefore, from 2023, all large 5G operators in the United States may significantly reduce 5G capital expenditure.

It remains to be seen how the reduction of 5G capital expenditure will affect suppliers such as Ericsson (which supplies 5G radios) and Crown Castle (which rents out the towers that store these radios).

But some financial analysts have warned of the coming slowdown. Morgan Stanley financial analyst wrote in a recent report to investors: “It is expected that the capital expenditure of Verizon and T-Mobile will drop significantly next year.”

Other analysts agreed. Raymond James, a financial analyst, said in a recent report: “The expenditure growth in 2022 is encouraging, but the slowdown in 2023 may worry investors.”

For some CFOs, the prospect of cutting 5G spending is good news. Mike Sievert, CEO of T-Mobile, said at an investor event in May: “This year is the peak year of capital, and next year’s expenditure will be lower.”

Verizon executives hinted at a similar trend. Hans Vestberg, CEO of Verizon, said at the investor event in September that the company spent $10 billion to upgrade the C-band medium frequency 5G network between 2022 and 2023. But next year, he said, “we will come down.”

In fact, T-Mobile will increase its capital expenditure from the previous ceiling of $13.5 billion to $13.7 billion in 2022. But analysts at Raymond James warned that T-Mobile could cut its capital expenditure by 24% in 2023 to $10.2 billion.

Similarly, Morgan Stanley analysts estimate that Verizon’s total capital expenditure on wireless and wired networks is about $22.3 billion this year, but will drop to $19.9 billion next year.

AT&T said it plans to invest $24 billion in capital expenditure on wireless and cable businesses this year, and roughly the same next year. However, this expenditure also includes large-scale optical fiber construction projects that AT&T hopes to fund by 2025.

CIMI analyst Tom Nolle recently pointed out that it is increasingly difficult for large network operators to justify their 5G expenditures. He cited survey data and said that the number of network operators expecting 5G to generate significant incremental revenue has declined. This has caused serious damage to the operator’s 2023 plan.

He wrote in August: “For many years, I have been investigating the planning focus of operators’ autumn cycle. I have never seen such a mess like this year. Operators really have no clue. The profit per bit needs to be improved, but somehow, they have neither the strategy of reducing costs nor the strategy of increasing revenue.”

Nolle said that this situation may hinder operators’ willingness to continue to invest billions of dollars in 5G networks next year.

But Raymond James analysts have slightly different views. They basically agreed that 2022 will be the peak of 5G network expenditure, and next year’s expenditure may tend to moderate, but they did not see a significant slowdown.

They wrote in a recent report to investors: “We still believe that the 5G project is a necessary and time-consuming project that requires the development of business cases and marketing plans. We believe that the 5G train is more like a 100 car freighter than a high-speed bullet; it starts slowly and will accelerate in a few years, but it may be unstoppable.”

AT&T plans to kick off its third quarter earnings season on Thursday and Verizon on Friday. Operators may have more information about long-term expenditure plans in quarterly conference calls. However, most investors may pay close attention to the profitability of Crown Castle on Thursday, because it is widely expected that the company will provide a financial outlook for 2023 during the conference call. This should set the tone for the next financial reporting season.