NEW OPPORTUNITIES EMERGE IN A RESURGENT TELECOM INDUSTRY Prospects for the telecommunications industry  have brightened considerably during late 2003 and early 2004. Reliable indicators now paint an encouraging picture for providers of telecom infrastructure engineering and construction services, thanks to a combination of factors. These include a generally stronger economy overall and significant new infrastructure initiatives by leading telecommunications providers. In terms of general economic conditions, the outlook in late 2004 is convincingly stronger than it has been for some time. Historically, Dycom’s customers have lagged other segments of the economy in experiencing the effects of long-term economic trends. This is especially true in terms of their capital expenditure plans. As is typically the case, the slowdown in telecom capital expenditure budgets trailed other industries by a matter of approximately six months, so it is no surprise that the resumption of spending did the same. Although it took several years to run its course, the downturn inevitably was reversed. The industry now appears to be moving decisively toward a resumption of long-term growth, and capital expenditure budgets are reflecting this trend. Unforeseen economic circumstances can never be ruled out completely, of course, but all indicators now point to a return to more normal growth patterns for the near to medium term, with some additional acceleration still possible. Beyond the steady improvement in general business Verizon’s FTTP roll-out is also an important indicator of broader industry trends. A recent public announcement by another regional Bell operating company, SBC Communications, indicates it too is committed to deploying fiber-optic capabilities deeper Although some might dismiss such a statement as being overly optimistic, a closer examination of the state of the industry reveals that Verizon’s fiber-to-the- premises (FTTP) roll-out is indeed one of the most significant industry developments in a number of years. The initiative itself is historic in size, involving the deployment of new infrastructure in Texas, Florida and seven other states in its first phase alone, bringing fiber-optic connections to several million homes in 2004 and 2005. Various industry analysts have estimated Verizon’s total financial commitment in this roll-out will be approximately $1 billion for labor and telecommunications equipment during 2004 alone. This work is expected to continue to ramp up in 2005. conditions, there are also reasons to be encouraged about the demand for telecommunications engineering and construction services in particular. Prominent among these is the launch of an ambitious new infrastructure upgrade by Verizon Communications.  In May 2004, Verizon unveiled plans to begin the first large-scale deployment of fiber-optic technology, calling it “the most significant transformation in over a century in the technology used to carry phone calls, data and video to and from homes and businesses.”