Feature Article

September 26, 2012

European Mobile Capex Dips in 2012; Might Climb Elsewhere

It just stands to reason that service providers will reduce capital investment, all other things being equal, during recessions, significant equity market downturns and other occasions when financial markets tighten. Western Europe seems to be experiencing all three conditions, so it is no surprise that mobile service provider capital investment is being curtailed.

Other regions of the world might not be affected so much. In fact, if some projections prove correct, Europe might be the only region that has lower capital investment for the year.

Mobile capital expenditure in Western Europe contracted 3.8 percent quarter over quarter in the second quarter of 2012, and also was down year over year by 19 percent. “Overall capital expenditure for the region is expected to drop 12 percent to $14.4 billion for the year, said Jake Saunders, ABI Research VP.

T-Mobile’s capital expenditure in the first half of 2012 was 4.9 percent lower than the previous year, while capital expenditure elsewhere in the Europe region dropped 8.8 percent, year over year. It is no surprise that T-Mobile executives point to the difficult economic climate and tightened access to funds as reasons for the stringency. But T-Mobile also has to reduce its debt load significantly, as do other service providers in the region.

Vodafone cut about £0.1 billion, year over year.

Telefonica capital investment in Spain was down 12.7 percent, year over year. In Telefonica’s U.K. market, capital investment actually climbed 9.5 percent, year over year. Telefonica also hiked spending in its German market.

France Telecom was an exception, boosting investment six percent.

Infonetics Research, for example, has forecast a boost in overall global telecom capital investment for 2012, says Stéphane Téral, Infonetics Research principal analyst. Infonetics Research expects worldwide service provider capital investment to climb in 2012, then level out in 2015 and 2016 at around the $345 billion mark.

Global telecom carrier capital spending grew three percent to $301 billion in 2011, up from 2010 levels, according to Infonetics Research.

But regional situations are quite distinct. The key capex contributors in 2012 will be 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 says.

In Latin America, capex was higher by 25 percent in 2011, led by América Móvil and Telefónica, as well.  

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Edited by Brooke Neuman

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