QUANTA SERVICES INC, QUANTA SERVICES MANAGEMENT ...

Overall, we are optimistic about this segment’s operations in the future. We continue to believe that
transmission pipeline opportunities can provide strong profitability, although these projects and the profits they
generate are often subject to various risks beyond our control. We have also taken steps to diversify our
operations in this segment through other services, such as pipeline integrity and gathering system opportunities,
and to restructure our gas distribution operations to improve margins. We believe these measures, together with
the potential in transmission pipeline opportunities, will position us for profitable growth in this segment over the
long-term.
Telecommunications Infrastructure Services Segment
Our telecommunications services operations are seeing increasing opportunities as stimulus funding for
broadband deployment to underserved areas continues to progress through the engineering phase into
construction. Approximately $7.2 billion in funding has been awarded under the ARRA for numerous broadband
deployment projects across the U.S. To receive funding for these projects, however, awardees are generally
required to file environmental impact statements, the approval of which has delayed projects. While some of
these projects are still waiting on required permits and approvals, most of the projects have received approvals
and are moving forward with construction. As awardees receive their environmental impact permits and ARRA
funding, projects are being rapidly deployed to meet stimulus deadlines that require completion of projects within
three years, which will extend through 2013 for many projects. We anticipate this deployment schedule will
increase spending for telecommunications services through 2013. We also anticipate some of our customers that
received stimulus funding to continue to expand their networks even though stimulus funding may no longer be
available.
We expect spending to continue by our customers on fiber optic backhaul systems to provide links from
wireless cell sites to broader voice, data and video networks. The substantial growth in wireless data traffic is
significantly straining the capacity of traditional backhaul infrastructure. Capacity constraints, as well as the need
for improved quality and reliability, are driving wireless carriers to upgrade existing backhaul systems to fiber
optic backhaul systems using fiber optic cable, referred to as “fiber to the cell site” initiatives. In addition, several
wireless companies have announced plans to increase their cell site deployments over the next few years,
continue network enhancement initiatives and accommodate the deployment of next generation wireless
technologies. In particular, the transition to 4G and LTE (long-term evolution) technology by wireless service
providers will require significant modification of their networks and new cell sites. We also believe opportunities
remain over the long-term as a result of fiber build-out initiatives by wireline carriers and government
organizations, although we do not expect spending for these initiatives to increase significantly over the levels
experienced in the past two years. We anticipate that the opportunities in both wireline and wireless businesses
will increase demand for our telecommunications services over the long-term, with the timing and amount of
spending from these opportunities being dependent on future economic, market and regulatory conditions and the
timing of deployment of new technologies.
Fiber Optic Licensing Segment
Our Fiber Optic Licensing segment is experiencing growth primarily through geographic expansion, with a
focus on markets where secure high-speed networks are important, such as markets where enterprises,
communications carriers and educational, financial services and healthcare institutions are prevalent. We
continue to see opportunities for growth both in the markets we currently serve and new markets, although we
cannot predict the adverse impact, if any, of economic conditions on these growth opportunities. Our growth
opportunities, however, have been affected in the education markets, which has in the past comprised a
significant portion of this segment’s revenues. We believe this slowdown is due to budgetary constraints,
although these constraints appear to be easing somewhat. Our Fiber Optic Licensing segment typically generates
higher margins than our other operations, but we can give no assurance that the Fiber Optic Licensing segment
margins will continue at historical levels. Additionally, we anticipate the need for continued capital expenditures
to support the growth in this business.
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