Wireless capex among U.S. carriers fell short of expectations in 2016 as operators tightened their belts ahead of 5G deployments. And it isn’t at all clear that network investments will ramp up significantly this year—especially if the industry begins to consolidate.

Sprint has been the most notable miser among operators in terms of network spend over the last year. After initially issuing capex guidance of $4.5 billion for its fiscal year 2016—which will close at the end of March—Sprint has regularly reduced that figure, most recently lowering it from “less than $3 billion” to a range of $2 billion to $2.3 billion.

Meanwhile, Verizon’s capital spending for 2016 came in at $17.1 billion, just below its guidance of $17.2 billion to $17.7 billion. T-Mobile’s cash capex (which excludes capitalized interest) for the year was $4.7 billion, essentially flat from the prior year. AT&T was the only carrier to spend more on capex last year than it had predicted, investing $22.9 billion—more than it ever had in one year—after issuing guidance of roughly $22 billion.

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‘Muted’ carrier spending and gloomy guidance

“Looking through results to date, carrier spending remains muted—with three of the four major carriers (AT&T, Sprint and Verizon) having reported fourth-quarter results—and aggregate capex being $1.1 biliion, or 15.1%, below consensus,” Jonathan Schildkraut of Guggenheim Securities wrote earlier this month. “By carrier, wireless capex for AT&T, Sprint and Verizon missed consensus estimates by 14.6%, 47.9% and 9%, respectively.”

Furthermore, carriers’ forecasts for 2017 offer few reasons to believe that they plan to open the capex spigot in a big way in the coming months. Verizon has said it expects to spend in the range of $16.8 billion and $17.5 billion in capex for 2017. AT&T is once again expected to spend roughly $22 billion, and T-Mobile plans to invest somewhere between $4.8 billion and $5.1 billion this year—all of which mark marginal increases at best.

Sprint likely won’t issue guidance until after its fiscal year closes, but executives have said capex will “accelerate in the fourth quarter and into fiscal year 2017” as it ramps up its densification efforts.

Cutting costs in a competitive market

U.S. operators reined in network capex investments in 2016 for a variety of reasons: Carriers have largely built out their LTE networks and have yet to commercially deploy 5G services, so timing is a consideration. Also, the U.S. wireless market has grown increasingly competitive as smartphone penetration rates have plateaued, prompting operators to tighten their belts.

Meanwhile, AT&T, Verizon and T-Mobile are all likely to spend billions on 600 MHz airwaves in the FCC’s ongoing incentive auction of TV broadcasters’ spectrum. And carriers’ efforts to densify their networks via small cells have been hampered by permitting difficulties and other headaches at the municipal level.

Indeed, wireless capex investments have slowed around the world in the wake of LTE deployments, according to a recent report from IHS Markit. LTE buildouts drove capital expenditure from 2011 through 2015, IHS observed, but 2016 “marked the start of a new trajectory of decoupled and desynchronized investments among the major geographic regions that will result in long-term flatness in the telecom sector.”

Global wireless spending will slowly pick up—barring unforeseen troubles

The worldwide market is regaining its footing, though, and will grow in the low single digits in 2016, IHS predicted. Global telecom capex is expected to increase from 2016 to 2020 at a compound annual growth rate of 0.8%, reaching $353 billion by 2020, barring an economic recession or other major hurdle.

And while investments in wireless networks won’t explode this year, spending may increase gradually despite increased competition and waning service margins. Small-cell buildouts could finally ramp up as logistical hurdles such as zoning and citing headaches are addressed, and operators may begin to open their wallets once the incentive auction wraps up in the coming weeks.

“We anticipate that wireless spending overall will accelerate in 2017, with the largest increases coming from AT&T and Sprint,” Jennifer Fritzsche of Wells Fargo Securities wrote in a research note in December. “With a better wireless spending environment in 2017 vs. 2016, one obvious beneficiary should be the tower segment. Even as new tower builds are given to new/smaller developers, it is hard for us to foresee how the 96,000 towers, which the three public tower companies own, are not touched with cell site amendments.”

The looming question of consolidation

Perhaps the biggest question regarding wireless capital expenditures in 2017, though, is the prospect of carrier consolidation. The wireless industry has been abuzz with speculation about potential mergers and acquisitions in the wake of Donald Trump’s winning presidential bid, with many analysts—and some executives—suggesting that the new administration would demonstrate a lesser regulatory touch. Much of that speculation has centered on a potential tie-up between T-Mobile and Sprint.

That marriage would surely have an impact on overall U.S. carrier capital spending, of course, as the combined carriers would look to cut costs where their networks overlap. And investors have taken notice, sending shares of major tower companies down in the weeks after the election. Most analysts still view a T-Mobile/Sprint merger as something of a long shot, however, due to both economic and regulatory hurdles.

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But the FCC’s anti-collusion period prevents carriers from discussing such a merger until well after the incentive auction ends, and any proposed tie-up likely wouldn’t have an impact on overall wireless capital expenditures until 2018—at the earliest. And while capex remains “slow” for the time being, according to Guggenheim Securities, it could pick up in the second half of this year.

“With … capex coming in well below consensus forecasts (and forward spending guidance relatively muted, we see our towers sector thesis playing out largely as expected,” Guggenheim’s Schildkraut wrote. “(B)ut we remind investors that we believe the set-up for towers in 2017 could be increasingly compelling as we move past the incentive auction and FirstNet RFP award milestones.”