Feature Article

June 19, 2012

Telecom Capital Expenditures Projected to Spike During 2012: Study

Telecom capital expenditures (capex) are expected to spike during this year – and then over the next few years level off, according to a new projection from Infonetics Research. The predicted amount on capex will be about $345 billion during the 2015 and 2016 years.

It was also reported that global telecom carrier capex increased 3 percent to $301 billion during last year when compared to 2010 levels, according to a report. The amount spent on every kind of network equipment increased during 2011 – except for TDM voice. It saw a “steep decline” during last year, the study adds. The study also showed that the Asia-Pacific region continued as the biggest spender on telecom carrier capex. In second place was the EMEA (Europe, Middle East, and Africa) region.

“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,” Stéphane Téral, an analyst at Infonetics Research, said in a recent statement from the research firm.

“High demand everywhere for telecom services, particularly mobile broadband, is fueling the latest investment cycle,” Téral adds.

During this year, key capex contributors were identified as Clearwire, Sprint and T-Mobile USA in the United States; NTT DoCoMo and Softbank Mobile in Japan; and KT, LGU+ and SK telecom in South Korea, Téral said. In addition, China has announced $58 billion worth of spending on telecom infrastructure. In Europe, the five economic powers there increased their “capital intensity” by two percent, the firm said. That marks the first time the trend has taken place in five years – and takes place even in an economic downturn in Europe. “As for Latin America, operators already spiked, with capex there up 25 percent in 2011, led by América Móvil and Telefónica,” Téral said.

Infonetics is also reporting that the wireless operators’ share of capex is projected to jump from about a quarter to close to a third of global capex between 2012 and 2016. The move follows the market trends showing increasing use of mobile devices.

Results also showed that telecom service provider revenue increased some six percent to $1.8 trillion globally during last year when compared to 2010 levels.

The data comes from Infonetics Research’s report “Service Provider Capex, Revenue, and Capex-by-Equipment-Type.” It looks at telecom operator revenue and capital expenditures (capex); forecasts capex by operator type, region and telecom equipment segment; and identifies telecom spending trends.

In another recent study from Infonetics Research, the firm said that telco service providers are expected to spend $75 billion a year for outsourced services by 2016.

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Edited by Brooke Neuman

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