I’m going to continue adding to my Juniper and Ciena here. Just adding some more common, and hoping that we do get a big pullback in the broader markets that would give me the opportunity to get outright aggressively long in these names.
Two headlines are adding to my bullishness in the broadband infrastructure sector even today (I was already bullish on the sector as you know):
China Mobile to ramp capital spending 49% this year – capital spending will rise to 190.2 billion yuan ($30.6 billion) in 2013 from 127.4 billion yuan a year earlier, Chairman Xi Guohua told a briefing in Hong Kong today – Bloomberg
China Mobile Makes Big 4G Bet China Mobile is plowing almost $7 billion this year into building its fourth-generation network, as the world’s largest telecommunications carrier strives to retain its supremacy atop China’s telecom market.
Cap ex is what a company spends on equipment like switches, towers, routers, computers, fiber optic cabling, along with the money they pay for construction of those towers, digging trenches for that fiber optic cables, building racks of servers, and so on.
Subtract $7 billion from $30.6 billion and you get the fact that China Mobile will be spending $23 billion on the broadband infrastructure like Routers and Fiber Optic Switches that support that 4G wireless end connection part. Doing a little more math just off those headlines and you realize that if China Mobile is going to spend 49% more this year on equipment and building up their networks which means they spent about $20 billion last year, which means that China Mobile, one of the fastest growing and largest network providers in the world is about to spend MORE on just the infrastructure equipment and buildout than they did on their entire network last year.
Here are a few more headlines about telcos expanding their cap ex on equipment and network build outs.
I think we are getting ourselves positioned in what will likely be some of the highest flyers and best plays in all the markets (while limiting our risks too) as we scale into these telco cap ex plays.