IHS Markit expects flattish telecom capex in 2016

Capital expenditures (capex) among global telecommunications companies should end the year flat to just slightly up, according to a note written by Stéphane Téral, senior research director, mobile infrastructure and carrier economics, at IHS Markit. Téral says that divergence in capex cycles worldwide means that, within the overall context of a flat year, some regions will see growth while others will see declines.

Capital expenditures (capex) among global telecommunications companies should end the year flat to just slightly up, according to a note written by Stéphane Téral, senior research director, mobile infrastructure and carrier economics, at IHS Markit. Téral says that divergence in capex cycles worldwide means that, within the overall context of a flat year, some regions will see growth while others will see declines.

For example, Téral says he expectslow-digit growth in North America, Europe, the Middle East and Africa (EMEA), and the Caribbean and Latin America (CALA) markets. However, declines in Asia Pacific, led by China, will offset these positive trends.

Overall, Téral and the market research firm expects global service provider capex to rise 0.7% to $341 billion by the end of the year. Wireline broadband in Europe, including fiber to the X (FTTX), will be one growth engine, as will capitalized software; this latter space, which accounts for about half of service provider capex, should grow by double-digits in 2016, Téral believes. Hardware sales in general, with the exception of systems for wireless and TDM voice, should enjoy a good year, he writes.

Despite the expected slippage in the region, Asia Pacific should remain the overall spending leader at 42% of the worldwide market, according to Téral. The overall capex growth comes as service provider revenues tick up a percentage point to $1.93 trillion. This contrasts to a 4% decline in 2015.

The market figures come from IHS Markit's service provider capex report, which covers worldwide and regional market size, forecasts through 2020, analysis and trends for revenue and capex by service provider type (telcos and cable operators), and capex by equipment type (broadband aggregation equipment; wireless infrastructure; IP routers and carrier Ethernet switches; optical equipment; IP and TDM voice infrastructure; video infrastructure; all other telecom/datacom network equipment; and CPE non-telecom/datacom network equipment).

For related articles, visit the Business Topic Center.

For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer's Guide.

More in Market Research