Agency: U.S. wireless carriers' capital expenditures are expected to increase significantly to $35 billion in 2021

Wall Street analysts at Deutsche Bank's research arm believe U.S. wireless network operators will significantly increase network spending in the coming years.

Specifically, the analysts wrote in a recent note to investors that they expect wireless carriers, including T-Mobile, Verizon and Dish Network, to spend a combined $35 billion in capital expenditures (capex) in 2021, with that number set to rise 6% to $37 billion in 2022.

“The last time industry capex grew this fast was in 2013, during the massive rollout of LTE,” the analysts said.

Analysts attribute their expectations to spending by two companies: T-Mobile and Dish Network. T-Mobile has discussed plans to spend $60 billion over the next five years to build a nationwide 5G network, part of which will use Sprint's 2.5 GHz spectrum. Meanwhile, Dish has said it plans to enter the wireless industry first as a T-Mobile MVNO company and then become a 5G network operator through a $10 billion network construction plan.

Deutsche Bank Research analysts said other factors could further increase operators' capital expenditures. For example, Verizon and AT&T could purchase 3.5 GHz CBRS spectrum or C-band spectrum and increase spending on building networks using those spectrums. Alternatively, the U.S. government could allocate more funds for 5G networks in urban or rural areas. However, they noted that these developments are not currently included in their forecast.

Increased network spending by the nation’s big wireless network operators could be good news for cellphone tower companies like SBA Communications and American Tower, as well as wireless network equipment suppliers like Nokia and Ericsson.

Deutsche Bank's U.S. forecasts largely align with global forecasts from Dell'Oro Group, an analyst firm widely cited by wireless networking equipment suppliers, which recently predicted that global telecom capital spending will grow at a compound annual growth rate of 1% between 2019 and 2022.

Of course, more and more of that spending is targeted at 5G. Dell'Oro noted that the overall market for radio access network (RAN) equipment -- which includes everything from 2G to 5G -- has grown in six of the past seven quarters and will continue to grow in the coming years.

However, Dell'Oro analyst Stefan Pongratz noted this week that the firm's global RAN forecasts could be impacted by ongoing sanctions on China's Huawei and the widening economic impact of the COVID-19 pandemic.

“Given the coupling between RAN and GDP growth, when there are material changes in GDP growth rates, our assessment is that a responsible forecast should factor in some added downside risk to account for a higher probability of operators taking capital expenditure reduction measures.”

Whether the pandemic-related recession will impact U.S. operators’ capital spending remains to be seen.