Kauffman Bros. Analyst Says Telcos Need Equipment


Major information-technology projects initiated by telcos and cable operators before the September stock-market meltdown are still going as planned, but overall spending is coming under greater scrutiny and some discretionary projects are being cut or deferred to next year, according to a research report by Kauffman Bros. tech analyst Karl Keirstad last week.

Keirstad checked with several sources in the equipment-vendor community to gauge spending trends. After touching base with suppliers to such giants as AT&T, Sprint Nextel, Rogers Communications, Comcast and DirecTV, the analyst determined that while all spending is coming under increased scrutiny as the economy softens, most of the telcos and cable operators view these projects as future revenue opportunities. That bodes well for suppliers like Amdocs — which Keirstad covers — who rely on big contracts with AT&T and the like.

“More importantly, we are hearing that many carriers and cable operators are reacting to the weakening economy by committing resources to better rationalize and drive cost savings from their existing legacy billing and other IT systems,” Keirstad wrote.

On the negative side, the analyst said that as IT budgets come under greater scrutiny, several new billing systems and other IT-centric projects are getting pushed out to the first half of next year. Rogers Communications, for example, is continuing to evaluate migrating its existing wireless and cable subscribers on to a new billing platform. Sprint Nextel has put off any modifications to its billing systems until business conditions stabilize.