Telecom CAPEX on the rise in China

April 8, 2003
8 April 2003, Boston, Ma, Lightwave Europe -- Capital expenditures (CAPEX) for both fixed line and new mobile infrastructure in China will climb from about USD14bn in 2002 to almost USD16bn in 2003.

8 April 2003, Boston, Ma -- Capital expenditures (CAPEX) for both fixed line and new mobile infrastructure in China will climb from about USD14bn in 2002 to almost USD16bn in 2003, according to Mark Winther, Group VP Worldwide Telecommunications at International Data Group (IDC).

Speaking at IDC's annual New Directions technology conference, Winther predicted that China's telecom CAPEX total will reach USD19bn by 2004, roughly on a par with spending levels in 2001 before local deregulation temporarily slowed the acquisition of capital equipment for China's fast-growing telecom infrastructure build-out.

Winther said that the three biggest Chinese telecom carriers - China Telecom, China Unicom and China Mobile - are currently spending 30% to 40% of revenues on new plant and equipment to meet both fixed and wireless demand in China's burgeoning telecom sector. The capital efficiency rate for these Chinese carriers is three to four times higher than what comparable carriers in the West are utilising.

The CAPEX telecom expansion in China is running counter-cyclical to global industry trends, John Gantz, IDC's Chief Research Officer and Senior VP, also noted. Over the next two years, as China's CAPEX rate surges nearly 20%, capital spending by worldwide carriers for fixed and wireless will decline 5% - from USD127bn this year to USD121bn in 2004.

Gantz predicted that 2004 will be the fourth consecutive year that global carrier CAPEX will have declined since 2000 when capital spending hit an all-time high of USD195bn.

In the telecom services sector, China will also continue to grow by leaps and bounds. IDC projects that telecom services in China will grow 16% this year, compared to 11% growth in 2002 when China's telecom services revenues topped USD69.7bn, or about 8% of the total USD870bn global telecom services market.

By Al Furst, Contributing Editor

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