Amazon’s  Q1’21 earnings report came out this past week.  While I was never a technology analyst, there was no question this print was VERY good all around.  But the number that REALLY jumped out to this old telecom analyst was in their FCF (Free Cash Flow) Reconciliation slide (slide 16 of their earning’s presenation) which outlined their “Purchase of Property & Equipment, Net of Proceeds from Sales & Incentives.”  In perusing this slide, I most definitely did a double take.  Why?  Because it said in this category, Amazon spent $40B in  Q1’21….yes – $40B in capital expenditures –  in  3 months.  To put this in perspective, this is 2.6x more than the $15.4B it spent in Q1’20.

But more importantly in reading this stat, it jogged my memory to a press release put out by AT&T on 11/8/2017.  The release was saying that AT&T would invest an additional $1B if the Competitive Tax Rate was enacted in the US.  In making its case, AT&T argued that it “Since 2012, AT&T has investment more in the US than any other public company.”  Like all carefully worded press releases, there was the all-important footnote.  The footnote noted that between 2012-2016 AT&T’s total investment in the  US, including acquisition of spectrum (never cheap!) and wireless operations, was $135B.

So going back to the earnings from Amazon this past week, consider this: the $40B Amazon spent in 90 DAYS was 30 percent of all the capital which AT&T spent in four years (or 1460 days).    While I recognize that Amazon is spending on different things than AT&T (mostly in the form of data centers vs. spectrum), one has to take a moment of reflection of how much has actually changed in the past 3.5 years.

I remember sitting on panels and one of my ‘talking points’ was that AT&T spent more capex than any US entity, second only to the US government.  And guess who was right behind them?  You guessed it…Verizon.  Now, fast forward three years…times most definitely are a changin’!

In my new job, I have spent the past month reconnecting with some of my favorite management teams and contacts.  In beginning one of those conversations, one of my smartest contacts saying: “Jen, did you think you would come back to the industry and see Microsoft and Amazon emerging as the largest telecom companies?!”  While they don’t have broadband pipes and spectrum in their tool kits, they certainly have the spending power and deep (deeeeeppppp) pockets to spend to create connectivity either through their own spending or partnerships.

On its recent Q1’21 call, Microsoft did not back away from this view.  Specifically noting: “…whether it’s on the hybrid infrastructure or the multi-cloud, multi-edge world, which I believe is going to be the world 10 years from now, we are very well-positioned. We have led in it, we currently lead in it, and we plan to continue that.

We have written before that the lines between the Communication Infrastructure silos are indeed blurring.  But maybe this ‘blurring’  it is a much bigger theme than just the infrastructure space and may apply to the carriers and tech players themselves.  If so, five years from now history will show that that quote from my very smart contact was quite clairvoyant!