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DECEMBER 20, 2007 -- Capital expenditures of telecom service providers are expected to be flat in North America and Europe/Middle East/Africa (EMEA), but up in Asia-Pacific and Caribbean/Latin America (CALA), according to Infonetics Research's (search for Infonetics) latest series of service provider capex, opex, ARPU, and subscribers reports.
Worldwide, service provider capex is expected to top $251 billion, a 7% increase over 2006, the report shows. Carrier network transformation projects, swelling numbers of mobile and broadband subscribers, and increasing demand for personal broadband services and high-bandwidth video services such as mobile TV, mobile video, IPTV, and video on demand will drive the increase.
Revenue earned by service providers is up in all regions from 2006 to 2007, with the fastest growth occurring in the CALA region, as carriers launch new services to meet the demands of hundreds of millions of worldwide subscribers.
"We saw some softness in North America and Europe in the first half of 2007 in terms of service provider capital expenditures. However, capital intensity and cash flow are the key parameters to watch for any signs of change, and so far so good: Service providers in North America, EMEA, and CALA are all operating at sustainable capex-to-revenue rates, between the 15% and 16% norm. And Asia-Pacific's capital intensity has come down to 20%, although there continues to be a major imbalance between developed economies such as Japan and South Korea, and developing economies such as China and India," said Stéphane Téral, principal analyst at Infonetics Research and lead author of the report.
"Since the world's top 15 service providers account for roughly 50% of worldwide capex, and some of them have slowed their spending, the 5-year outlook looks even more sustainable," Téral added.
Other highlights from the reports include:
- Service providers worldwide spent a combined $235 billion on capex in 2006, up 17% from 2005.
- Worldwide service provider capex will plateau in 2009 and begin declining in 2010.
- The main capex inhibitors in North America and EMEA are slow downs in wireless spending and 3G uptake.
- In the five years between 2006 and 2010, service providers in North America, EMEA, Asia-Pacific, and CALA together will earn $7.5 trillion cumulative in annual worldwide revenue.
- The four telecom and data networking equipment categories being invested in most heavily in 2007 are mobile RAN, voice, optical, and broadband aggregation equipment.
Infonetics' Service Provider Capex, Opex, ARPU, and Subscribers reports track revenue, capex, capex-to-revenue ratios, opex, average revenue per user, subscribers, and access lines for public and semi-private/government-owned service providers, including short-term forecasts by provider for capex and revenue. The reports also provide long-term forecasts by service provider type for capex and revenue, and short-term forecasts for capex by telecom equipment type, by service provider type.
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