Worldwide carrier capex rises

Jan. 1, 2007

Publicly owned wireline and mobile service providers in North America, Europe, and Asia Pacific spent a combined $192.8 billion on capex in 2005, and are projected to have increased their capex 5% to $203.1 billion in 2006, according to new reports from Infonetics Research (www.infonetics.com).

“The telecommunications industry has entered a new investment cycle, as demonstrated by the increase in carrier capex in all regions of the world,” contends Stéphane Téral, principal analyst and lead author of the three “Service Provider Capex Analysis” reports, which examine spending (both capex and opex) in North America, Europe, and the Asia Pacific region.

Téral notes that opex-to-revenue ratios are higher in Asia and Europe than in North America, which is due to the rapid consolidation among U.S. telcos.

In North America, carrier capex will increase 6% between 2005 and 2006, driven by Verizon and AT&T, followed by cable multiple-system operators (MSOs) Comcast, Time Warner Cable, Cox Communications, and Rogers Communications. Revenue is projected to increase 4%, resulting in a 62% opex-to-revenue ratio in 2006, say analysts.

European carrier capex is expected to increase 9% between 2005 and 2006, driven by Deutsche Telekom, Telefónica, France Telecom, and BT. Carrier revenue is forecast to increase 4%, resulting in a 67% opex-to-revenue ratio in 2006.

In the Asia Pacific region, meanwhile, carrier capex should see a 5% increase between 2005 and 2006, led by NTT (which accounts for 29% of total capex in the region), KDDI, KT, and Telstra. Revenue will increase 3%, resulting in an opex-to-revenue ratio of 69% in 2006.

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