As more states get approvals for the government Broadband Equity, Access, and Deployment (BEAD) Program for expanding broadband access, it could bode well for network construction providers like Dycom.
Speaking to investors during its second-quarter 2025 earnings call, outgoing CEO Steven Nielsen (he will retire at the end of November) said that the company notices that more states are getting their funding proposals approved by NTIA.
“This is always hard to deal with or calculate with certainty, but we’ve been encouraged by the pace of BEAD approvals,” he said. “The state-level approvals by NTIA have picked up over the summer. And it may be a little bit counterintuitive. Still, for some of the smaller customers, they’ve seen evidence that, hey, this BEAD thing is coming, these states are getting approved, and so we know that within a year, there’s going to be actual activity on that plan, that they may have slowed a little bit going into the back half of the year.
However, Nielsen emphasized that while it’s “hard to tell with real certainty, it has been an impressive run of state approvals in the last, call it, six weeks.”
The $42.5 billion BEAD program calls for building rural broadband networks in unserved and underserved areas across the country. Thus far, 35 states and territories have completed all ten approval steps as required by the NTIA while 21 others have completed 9 of the 10.
Nielsen said that Dycom can leverage its cadre of labor and subcontractors that have served the rural markets for several decades.
“We have a broad footprint for both cable and telephone companies where we provide master services agreements across broad sections of the country,” he said. “And so, I think we’ll make prudent investments, but we typically don’t make speculative investments before we see the size of the opportunity. We think this one will be pretty big, but we want to be a bit closer before we start pulling the trigger on increased expenditures to support it.”
Diverse wireline upgrades
Driven by the need to deliver gigabit-speed networks to consumers and businesses, Dycom saw many wireline providers expanding or building new networks.
“An increasing number of diverse industry participants are constructing or upgrading wireline networks throughout the country,” Nielsen said. “These wireline networks enable the delivery of gigabit network speeds to consumers and businesses.”
Additionally, the growing interest in hosting AI in new and existing data centers is driving new deployments of high-capacity, low-latency intercity fiber networks and metro rings.
“The advent of AI data centers has sparked interest in broad new national deployments of high-capacity low latency intercity networks as well as metro rings,” Nielsen said. “The level of interest in intercity networks is the highest we have seen in the last 25 years.”
While he did not indicate involvement with any specific data center build, Nielsen cited the recent agreement between Lumen and Corning. The agreement, Lumen’s largest cable purchase, will equip Lumen to meet the network infrastructure needs of major data center operators for years to come, including Microsoft, which announced it’s investing with Lumen to support the rising demand for its data centers.
Corning will reserve 10% of its global fiber capacity for the next two years to facilitate Lumen's build of a new network to interconnect AI-enabled data centers.
“If you think about Corning’s announcement of having an order for 10% of their annual capacity each year for the next two years, that’s a pretty sizable opportunity for us in the outside plant portion of the network,” Nielsen said. “So, I think we’re seeing a nationwide opportunity to enhance the intercity network, which we haven’t seen for a long time. So how that stacks up against many other robust opportunities remains to be seen, but we think it’s significant.”
Scaling wireless
Besides enhancing wireline networks for last-mile fiber broadband and supporting data centers, Dycom is seeing an ongoing movement in the wireless industry.
Wireless growth, as Dycom sees it, is being driven by two trends: wireless operators building out fixed wireless access (FWA) broadband and mobile services and operators wanting a common fiber network to support their wireline and wireless assets.
“Wireless networks are deploying additional spectrum bands and equipment to more broadly and efficiently provision higher broadband services for both fixed and mobile access,” Nielsen said. “Industry participants have stated their belief that a single high-capacity fiber network can most cost-effectively deliver services to consumers and businesses, enabling multiple revenue streams from a single investment. Some of these same industry participants who also provide wireless services strongly believe that the ability to provision converged wireline fiber and wireless services creates significant competitive advantages.”
Dycom is also beefing up its wireless capabilities to meet these new demands. It recently completed a deal to acquire Black & Veatch’s public carrier wireless telecom infrastructure business, which gives it more power to address new wireless opportunities across various markets.
This acquisition affords Dycom with various benefits. It expands Dycom’s geographic scope to broadly address growth opportunities in wireless network modernization, including Open RAN transformation initiatives and deployment services.
For fiscal 2026, Dycom forecasts that the acquired business will contribute $250 million to $275 million of contract revenues. Dycom expects modest revenues in Q3 and Q4 2025 as the company is currently focused on site acquisition for next year’s construction program.
Nielsen said, "While our review of the acquired backlog is still preliminary, we expect this acquisition to add approximately $1.0 billion of total backlog, which we will reflect in our third quarter report.”
AT&T leads revenue mix
Dycom reported that its second-quarter 2025 revenue increased 15.5% yearly to $1.2 billion, and organic revenue increased 9.2%.
Nielsen said it saw increased activity across both its wireline and wireless customers. “As we deployed gigabit wireline networks, wireless/wireline converged networks, and wireless networks, this quarter reflected an increase in demand from 3 of our top 5 customers,” he said.
AT&T was our largest customer, accounting for 17.5% of revenue, or $210.2 million. Dycom said that AT&T grew organically by 20.6%, its first quarter of organic growth since January 2023.
Lumen was Dycom’s second largest customer at 13.6% of total revenue, or $163.7 million, growing organically by 1%. Revenue from Comcast was $105.6 million, or 8.8% of income. Comcast was Dycom’s third largest customer. A customer who asked Dycom not to identify was its fourth largest customer at $95.8 million, or 8.0% of revenue. This customer grew 73.2% organically. And finally, Verizon was our fifth largest customer at $85.3 million, or 7.1% of income.
“This is the twenty-second consecutive quarter in which all of our other customers, in aggregate, excluding the top five customers, have grown organically,” Nielsen said. “Of note, fiber construction revenue from electric utilities was $88.7 million in the quarter.”
Dycom said its backlog from its largest customers at the end of the second quarter was $6.83 billion versus $6.364 billion at the end of the April 2024 quarter, an increase of $470 million. The company said about $3.83 billion of this backlog is set to be completed in the next year.
During the quarter, Dycom secured a Verizon construction agreement in New York. For Brightspeed, it won a new construction agreement in Ohio, Pennsylvania, New Jersey, Virginia and North Carolina. Meanwhile, Comcast awarded Dycom a nationwide maintenance and construction agreement. Finally, AT&T has a utility line locating agreement in California and various rural fiber construction agreements in Arizona, Oklahoma, Arkansas, Alabama, and North Carolina.
“Backlog activity during the second quarter reflects solid performance as we booked new work and renewed existing work,” Nielsen said. “We anticipate substantial future opportunities across a broad array of our customers, including those who have recently entered into strategic transactions and partnerships.”
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