Infonetics: Telecom capex will spike this year

Vendors across the communications ecosystem have complained during the first half of this year about slow telco spending. But the capital expenditures (capex) should start flowing again soon, according to Infonetics Research’s new report, Service Provider Capex, Revenue, and Capex-by-Equipment-Type.

Jun 19th, 2012

Vendors across the communications ecosystem have complained during the first half of this year about slow telco spending. But the capital expenditures (capex) should start flowing again soon, according to Infonetics Research’s new report, Service Provider Capex, Revenue, and Capex-by-Equipment-Type.

"We're expecting a telecom capex hike in 2012 as operators around the world ramp their spending like crazy to launch LTE networks, modernize their mobile networks, and carry out national wireline broadband initiatives. Operators have to invest in their networks or they'll disappear -- competition is too cut-throat not to," notes Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research.

As Téral’s comment implies, much of the spending will target wireless network expansion. Wireless operators' share of capex will grow from a quarter to nearly a third of global capex between 2012 and 2016, Infonetics predicts.

"High demand everywhere for telecom services, particularly mobile broadband, is fueling the latest investment cycle,” explains Téral. “The key capex contributors in 2012 will be Clearwire, Sprint, and T-Mobile USA in the US; NTT DoCoMo and Softbank Mobile in Japan; and KT, LGU+, and SK telecom in South Korea. China recently revealed a US$58 billion economic stimulus package to fund a fresh round of investment in telecom infrastructure. Meanwhile, Europe's Big 5 have increased capital intensity by 2 percentage points for the first time in 5 years, right in the middle of the critical economic downturn! As for Latin America, operators already spiked, with capex there up 25% in 2011, led by América Móvil and Telefónica."

The expected upturn in 2012 follows a growth year in 2011, when global telecom carrier capex grew 3% versus 2010 to $301 billion. With the exception of TDM voice, which saw its capex share plummet, spending on every type of network equipment grew in 2011. However, Infonetics expects worldwide capex spending to level out in 2015 and 2016 at around $345 billion.

Infonetics' biannual Service Provider Capex report tracks revenue and capex by service provider type and capex by equipment type. The report covers all major world regions and includes historical data and forecasts from 2003 through 2016, and analysis with trends and predictions by region, carrier type, and technology segment.




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