Infonetics: Telecom carrier investment cycle underway

A 3% decrease in telecoms service provider capital expenditure (capex) in 2010 represents the last capex dip we’ll see for a while, market research firm Infonetics Research predicts in its new Service Provider Capex, Opex, ARPU, and Subscribers report.

A 3% decrease in telecoms service provider capital expenditure (capex) in 2010 represents the last capex dip we’ll see for a while, market research firm Infonetics Research predicts in its new Service Provider Capex, Opex, ARPU, and Subscribers report.

Global capex last year came in at $289 billion. The 3% decline in 2010 followed a 5% decline in 2009. However, service provider revenues grew 3.5% to $1.72 trillion last year, providing the impetus for an increase in capex this year and for a few years to come, Infonetics asserts.

Infonetics forecasts a capex increase of 4.7% this year. "As we correctly predicted, 2011 is shaping up as the first year of a new 3- to 4-year investment cycle that should lead us to a plateau in 2014,” states Stéphane Téral, principal analyst for mobile and FMC infrastructure at Infonetics Research.

Téral adds that equipment vendors shouldn’t celebrate too much, however. “We're talking about low single-digit percent capex growth, not the double-digit growth rates of 2006 to 2008, because overall telecom service revenues just aren't there to justify significant hikes, despite increasing usage of both wireline and wireless broadband,” he explains.

“Mobile network modernization and migration to LTE, along with national wireline broadband initiatives in various regions, will drive this investment cycle," Téral concludes.

Looking back at 2010, the report cites WiMAX equipment (+42%), IP routers and Carrier Ethernet switches (+21%), and broadband aggregation equipment (+7.3%) as bright spots. However, declines in other equipment categories, especially mobile infrastructure (-11%), offset these gains.

Infonetics' capex reports track revenue, capex, capital intensities (capex-to-revenue ratios), opex, ARPU, subscribers, and access lines of about 200 public and semi-private/government-owned service providers in North America, EMEA (Europe, Middle East, Africa), Asia Pacific, Central and Latin America, and worldwide.

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