Telecom industry ends 2003 with best results since 2000, say RHK analysts

February 24, 2004 San Francisco, CA -- The telecom equipment industry saw its biggest sequential increase in quarterly sales in the fourth quarter of 2003 since the bubble year of 2000, contends market research and advisory services firm RHK Inc. According to RHK analysts, the telecom industry "is past the bottom of its recession and growing again."

Feb 24th, 2004

February 24, 2004 San Francisco, CA -- The telecom equipment industry saw its biggest sequential increase in quarterly sales in the fourth quarter of 2003 since the bubble year of 2000, contends market research and advisory services firm RHK Inc. According to RHK analysts, the telecom industry "is past the bottom of its recession and growing again."

In North America, wireline service providers spent $7.5 billion on capital projects, 30% more than in the third quarter, while mobile operators' capital spending increased by 43%, reaching $6.1 billion. The dramatic rise in capex spending signals increased efforts by telecom service providers to address competitive threats from wireless and cable television, says RHK.

Cisco, Alcatel, Nortel, and Lucent ended 2003 where they started it--with first, second, third, and fourth highest shares of the $17.7 billion transport, switching, and access equipment market. Asian vendors made significant share gains in 2003, with Huawei moving from eighth to fifth, NEC and ZTE each moving up three places, and UTStarcom moving up four places, to 17th.

Globally, sales of equipment for long distance networks grew 19% to nearly $2.4 billion, while cable television equipment vendor sales were not far behind at 17%, topping $1 billion. Optical networking was boosted by sales of metro networking gear, while cable TV sales were driven by set-top boxes for digital TV rollouts. Sales of switching and routing products for IP networks were up 8% during the fourth quarter, while sales of broadband Internet access gear such as Digital Subscriber Line Access Modules (DSLAMs) and Cable Modem Termination Systems (CMTS) grew to $1.1 billion, a 13% increase.

"The fourth quarter 2003 results clearly show the telecom industry is past the bottom of its recession and growing again," contends John Lively, RHK's director of forecasting. "Despite concerns about the stability of the Chinese banking system, declining revenues of North American service providers, and the projected US budget deficits, RHK is forecasting continued growth in virtually all telecom sectors in 2004," he adds.

RHK's analysis of the fourth quarter 2003 industry results, along with detailed shipment and market share histories of individual vendors, is contained in a series of reports available to clients at RHK's online Research Center. For more information about this report, visit www.rhk.com or call RHK Client Services at (650) 246-2000.

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