Service Providers Plan to Boost Capital Investment

About 80 percent of mobile service providers in North America and Europe surveyed by UBS report they will increase their capital investment in wireless infrastructure over the next one to two years, despite macroeconomic issues.  4G investments

But some are not so sure what might happen if another recession occurs soon. Recession threat Colin R. Knudsen, managing director at investment bank Coady Diemar Partners, New York, says “a double dip recession definitely has the potential to dampen mobile investment for a period, but the consumption trends are compelling and investment will continue.” Potential recession impact

On one hand, U.S. operator investments in Long Term Evolution networks will not stop, even in the case of a renewed recession for competitive reasons. On the other hand, stringency in other areas has to be expected. That always happens in a recession.

Total industry investment will vary from region to region, a not-unexpected development in any year as capital investment was skimpy in 2008 and 2009 as a response to the global recession. But overall investment might increase only modestly after “bottoming” in 2010.

In late 2010, Infonetics Research said that "telecom capital expenditures are bottoming out at $289 billion this year.” Keep in mind that this includes spending on fixed as well as mobile networks.

Infonetics also in late 2010 predicted the start of a new investment cycle in 2011 that would last several years, with capex growing to $321 billion in 2014 before slowing again, says Stéphane Téral, principal analyst for mobile and fixed-mobile-convergence infrastructure at Infonetics Research.

Mobile operator capital expenditure was expected to grow five percent in 2011, to reach $119 billion, according to ABI Research. Radio access network equipment was predicted to represent 56 percent of global operator investment. Mobile capex forecast

One underlying trend is a shift of capital investment in wireless networks, as compared to fixed networks. The UBS survey suggests investments in Long Term Evolution will grow. Over 40 percent of the participants in the UBS survey stated that they are already rolling-out and another 40 percent intend to roll-out LTE in the future. On the other hand, the prior year’s survey showed that 50 percent of respondents intended to roll-out LTE and 50 percent were undecided. 

UBS interviewed 515 consumers and 30 major mobile service provider executives in North American and Europe as part of the survey.