Telecom, chips and data centers
Capex intensity
Capital spending as a share of revenue.
Last reviewedWhat does Capex intensity mean?
Capex intensity is capital expenditure divided by revenue. It shows how much a business must reinvest in equipment and networks to keep running and growing. Example: a telecom operator with revenue of 10 billion that spends 1.8 billion on its network has a capex intensity of 18 percent. Telecom, chip manufacturing and data centers are capital-intensive, while software is not. High capex intensity eats into free cash flow, which is why telecom analysts look at EBITDA minus capex (operating free cash flow), not EBITDA alone.
Where does it come up in case interview prep?
- Cost structures, margins and capital intensity across industriesLesson in How industries work: the toolkit
- Getting industry-aware fast: the 10-minute industry scanLesson in How industries work: the toolkit
- How telecom operators work and make moneyLesson in Telecom: mobile and fixed networks
- Telecom unit economics: fiber roll-out, churn, and capexLesson in Telecom: mobile and fixed networks
- Telecom: players, trends, regulation, and how to crack the casesLesson in Telecom: mobile and fixed networks
- Chip and data center economics: utilization, yield, and powerLesson in Semiconductors, electronics, and data centers
- Semiconductors and data centers: players, trends, regulation, and how to crack the casesLesson in Semiconductors, electronics, and data centers
- Data centre economics: per MW, per rack and per GPU hourLesson in Data centres, cloud and AI compute
Related terms
- Capex (capital expenditure)Spending on long-lived assets such as machines and buildings.
- Free cash flowCash from operations minus capital expenditure.
- EBITDAEarnings before interest, taxes, depreciation and amortization.
- Depreciation and amortizationSpreading the cost of a long-lived asset over its useful life.
- SpectrumThe radio frequencies mobile operators license from governments to carry signals.
- Take-up rateThe share of homes or customers who could buy a service that actually do.
- FablessA chip company that designs chips but has them made by someone else.
- FoundryA company that manufactures chips designed by other firms.