After several years of huge expenditures and customer growth, there are more and more signs that the large 5G service providers in the United States are preparing to enter a cooling period this year.
Some financial analysts and operator executives have begun to imply that the mobile industry will not attract as many new customers this year as in 2021 and 2022. At the same time, some operators are also ready to tighten their wallets after years of huge network spending. Although these expenditures have improved 5G and optical network, most of the work has been completed, and some operators are now looking forward to reducing their annual capital expenditure.
These two trends are not surprising, but it is worth noting that the 5G industry is moving from the investment stage to the stage of seeking return on investment.

5GUsers are growing, albeit at a slower pace
Later this month, the three largest wireless network operators in the United States will begin to report their fourth quarter results, and they are expected to report customer growth. This is important considering that Verizon will not attract more customers in 2022.
Hans Vestberg, CEO of Verizon, said at the investor conference last week that the net growth of users in the fourth quarter was optimistic. T-Mobile said that it had a net increase of 927000 post-paid phone users in the fourth quarter. Most analysts expect that this number will exceed the number of new users of Verizon and AT&T in the same period.
Despite the growth of operator users, Evercore financial analysts wrote in a recent report to investors that by 2023, the ultra-fast growth of the wireless industry in the United States should significantly slow down. They wrote: “With the growth of the penetration rate of young people slowing down and the growth of commercial service lines beginning to weaken, we expect the net growth of wireless payphone users to slow to 7.7 million in 2023, compared with 9.1 million in 2022.”
Analysts and executives attributed the recent user growth to a variety of factors, including children getting their first mobile phone and corporate customers purchasing more service lines. Although many people had predicted that customer growth would slow down significantly in 2022, this did not happen.
Pascal Desroches, chief financial officer of AT&T, said at a recent investor event that they had seen more normalization of growth in recent months.
Reduced capital expenditure intensity
American operators have been investing heavily in the construction of 5G IF spectrum, but this speed will also slow in the coming months.
Kyle Malady, director of Verizon Network, said at a recent investor event: “We will reduce capital intensity in the future.” Specifically, he said that Verizon’s capital expenditure in 2024 will fall from $22 billion in 2022 to about $17 billion. Malady attributed this slowdown to Verizon’s completion of the One Fiber expansion project and its large 5G C-band IF spectrum expansion.
Although Malady’s comments made a lot of headlines, they were consistent with the statements of other Verizon executives in 2022. The situation of T-Mobile and AT&T is basically the same, although the optical fiber construction of AT&T is expected to continue until 2025.
The financial analyst of B. Riley Securities pointed out in a recent report to investors: “Although we believe that (Verizon) capital expenditure contraction will mainly affect 5G suppliers such as Ericsson, other market segments such as optics may also be affected.”
The financial analyst of Raymond James predicted the slowdown of capital expenditure in a report to investors in October 2022. They wrote: “The growth of expenditure in 2022 is encouraging, but the slowdown in 2023 may make investors worried.”
Trends of fiber broadband and FWA
In the turmoil of 5G, American optical fiber service providers are also striving to achieve their goals. This is not difficult for Frontier. The operator said that 75000 new optical fiber customers were added in the fourth quarter, exceeding the 71000 customers expected by most Wall Street.
However, Lumen Technologies confirmed its concern that the company could not achieve the goal of optical fiber construction in 2022. Kate Johnson, the new CEO of Lumen, said at a recent investor event: “The suspension of investment is actually to find out how we can maximize shareholder value. The reality is that quantity is not always better than quality.”
At the same time, AT&T successfully expanded its optical fiber construction due to the establishment of a new joint venture with BlackRock Alternatives, a private equity company.
Evercore’s financial analyst wrote: “We expect that the construction speed of telecommunication optical fiber will be slightly accelerated in 2023, with 5.8 million new homes covered, compared with 5.4 million in 2022. The expected growth is driven by the slightly accelerated construction speed of Frontier and Brightspeed, and offset by the slower construction speed of Verizon and AT&T. By the end of 2023, we expect about 49 million American households (slightly more than 1/3) It will have fiber broadband products. ”
However, analysts also said that they expected fixed wireless access (FWA) services to continue to dominate the home broadband market in 2023. T-Mobile and Verizon seized almost all the growth in this field in 2022, causing a sensation.
Evercore analysts wrote: “We expect that fixed wireless users will again account for the majority of user growth in 2023, although we expect that the net new residential users will be basically flat at 2.2 million.”