MAY 19, 2009 -- Market research firm Infonetics Research (search Lightwave for Infonetics) recently released its Service Provider Capex, Opex, ARPU, and Subscribers report, which features analysis on how the current economic recession is affecting telecom markets by region, as well as which telecom equipment segments are most and least affected.
"As we anticipated, the first quarter of 2009 was ugly for equipment vendors because service providers were very cautious, pulling back significantly in some areas, particularly TDM and IP voice infrastructure and SONET/SDH optical equipment spending," says StÃ©phane TÃ©ral, Infonetics Research's principal analyst for mobile and FMC infrastructure. "On the other hand, it was a stellar quarter for large service provider shareholders, as free-cash-flow among service providers is at an all-time high.
"Overall, service providers around the globe are maintaining clean balance sheets, telco revenue continues to show resilience, and consumers are increasing mobile Internet usage on their iPhones and other smartphones," he continued. "Meanwhile, China's massive stimulus plan is kicking in, the US stimulus package is about to kick in, money is flowing in Russia, and Brazil and China are getting back on track and will grow faster than the developed world. This all adds up to a likely capex hike in the second half of 2009, driven by the learned lesson that if operators don't invest in their increasingly traffic-burdened networks to maintain high-quality service, they risk losing customers to competitors."
Report highlights include:
- Global service provider capex hit a plateau at $298 billion in 2008, marking the end of a five-year investment cycle.
- This represents a 12.9% increase in capex spending from the previous year, with much of the growth due to currency appreciation against the US dollar, which peaked in July 2008.
- 2008 also marked the beginning of a three-year disinvestment cycle, although this one will not be as dramatic as the one that followed the great telecom crash of 2000.
- Infonetics projects a 2.8% downturn in worldwide carrier capex in 2009, followed by a flat 2010 and a slow return to growth in 2011 with the start of a new investment cycle.
- Worldwide service provider revenue is expected to weather the economic storm and grow from $1.7 trillion in 2008 to $2 trillion in 2013.
- Incumbent carriers entered the global recession on solid financial ground, and will likely exit the crisis even stronger, maintaining if not increasing their lion's share of capex and revenue.
- Fueled by currency appreciation on top of double-digit growth rates in native currencies, Asia Pacific service providers now spend the largest share on telecom capex, followed very closely by service providers in Europe, the Middle East, and Africa.
- Mobile infrastructure capex will continue to dominate total global telecom and datacom spending, followed by voice equipment.
- The world's 10 largest service providers (ranked in order by 2008 revenue) are AT&T, NTT, Verizon, Deutsche Telekom, France TÃ©lÃ©com, Vodafone, China Mobile, TelefÃ³nica, BT, and Sprint. (The strong euro tends to push the European service providers closer to the top.)
Infonetics' capex report series tracks revenue, capex, capex-to-revenue ratios, opex, ARPU, subscribers, and access lines of 171 public and semi-private/government-owned service providers on a monthly and biannual basis. The reports include past, current, and forecast capex and revenue data through 2013 and equipment forecasts through 2009, market drivers, analysis, service provider demographics, and customizable pivot tables to analyze data by service provider, service provider type, and equipment category. Each series includes a Fundamental Telecom/Datacom Market Drivers report with analysis of overall market conditions for service providers, enterprises, subscribers, and the global economy.
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