CenturyLink says that in 2018 a large portion of its capital budget will focus on building out its fiber network to satisfy two key elements: its growing enterprise base and increasing consumer broadband speeds.
Sunit Patel, CFO of CenturyLink, told investors during the Morgan Stanley Technology, Media & Telecom conference that 2018 capex will be 16% of its revenues this year.
“We said that capex will be 16% of our revenues this year excluding integration costs,” Patel said. “We think that 16% is a pretty healthy investment for the consumer and enterprise side.”
On the enterprise side, CenturyLink will dedicate capital toward enhancing its fiber and network to buildings and businesses that have signed contracts for service.
“For the enterprise sector, the capex is mostly success-based combined with some capex to turn up data centers in Latin America or building more metro fiber networks,” Patel said. “There will be some level of expansion, but most of the capital will be success-based.”
For the consumer, CenturyLink will look for opportunities to future-proof its network to satisfy broadband speeds customers need today and later as usage levels rise.
“On the consumer side, the focus will be on enabling higher broadband speeds,” Patel said. “We won’t be spending capital on 5-20 Mbps connections, but rather on 100 Mbps and higher speeds.”
A second part of the consumer capex budget will be on raising speeds, particularly in higher density areas where the telco can reach multifamily homes and apartments, as well as leveraging the CAF-II funds for rural areas.
“We’ll focus more on return on investment, which includes rural capital from the CAF II program,” Patel said. “In urban areas we want to make sure we’re spending the capital where the returns make sense so focusing on MDUs make more sense in urban areas.”