Worldwide OPGW demand shifts to Asia and emerging markets, say KMI analysts

September 1, 2004 Providence, RI -- Worldwide demand for optical ground wire (OPGW) remains strong and will grow by a 2% compound annual growth rate (CAGR) from 2004 through 2008, contends a new report from KMI Research. That said, KMI analysts believe much stronger growth rates and opportunities exist in the emerging markets.

September 1, 2004 Providence, RI -- Worldwide demand for optical ground wire (OPGW) remains strong and will grow by a 2% compound annual growth rate (CAGR) from 2004 through 2008, contends a new report from KMI Research. That said, KMI analysts believe much stronger growth rates and opportunities exist in the emerging markets.

According to the report, there has been a shift in regional share for OPGW deployments toward Asia, Africa, Middle East, and Latin America. Asia and the developing countries will be driven by OPGW demand in China, which accounted for approximately 24% of worldwide OPGW demand in 2003. China's demand is influenced by major infrastructure projects in less populated areas. As a developing nation, China has continued extensive deployments of optical fiber to upgrade its telecommunication's infrastructure. China and other developing countries will account for 84% of OPGW deployments from 2004 to 2008.

Worldwide demand for OPGW peaked in 2000 when more than 60,000 kilometers were installed. Since 2000, annual demand has declined each year, but demand is still comparable to the levels at the outset of the telecom boom.

The demand forecast shows that Asia will be the largest regional market for OPGW. Asia accounted for 44% of OPGW demand in 2003--up from 19% in 1999--and will retain that share through 2008. North America and Western Europe, the two largest markets historically, fell from a combined 37% share in 1999 to an 18% share in 2003. The shift in OPGW demand toward developing countries underscores the relative saturation of fiber requirements for utilities in North America and Western Europe, whereas huge opportunities still exist in the emerging markets. With the exception of Brazil, China, and Saudi Arabia, few developing countries deployed OPGW in the 1990s. Since 2000, the developing countries have installed almost 155,000 km of OPGW as compared with 84,000 km installed from 1996 through 1999, an increase of 85%.

In use since the early 1980s, OPGW consists of an aluminum or stainless steel tube that holds optical fibers. This tube is contained within stranded aluminum-covered-steel wires that have both load-bearing and conductive functions. OPGW serves two purposes: First, it replaces the shield or static wire installed on high-voltage power lines to protect the network from lightning strikes by taking them to ground. Second, the optical fibers are used for internal data acquisition and communications, but they also can be leased to third-party service providers for additional revenue.

For more information about the report, "Worldwide OPGW Markets," visit the company's Web site at www.kmiresearch.com.

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