December 20, 2012

How Much and Where Will Telecom Capex Grow in 2013?


Analysts seem to agree that global service provider capital investment will grow more slowly over the next five years. Generally speaking, the expectation is that growth rates in developed countries will slow or decline, but global capex spend will continue to grow on the strength of demand for mobile services in developing countries.  

Globally, service provider capital investment, which was down in 2009 and picked up in 2010, will remain essentially flat or decline in the developed world in 2013, while continuing to grow in the BRICS and select emerging market and  developing countries, Insight Research predicts. 

Of course, major economic events can have a strong yet temporary effect. Service provider capex experienced a sharp drop in 2009 and recovered in 2010 in the EU-27 Member States, North America and Japan; but going forward will show little growth, the research firm predicts. 

Basically, capital investment is showing growth in] Asia, Africa, and Latin America-Caribbean regions and holding steady or declining in Europe. Overall, growth over the next several years (2011 to 2017) will be half of the 2004 to 2010 period.

Infonetics Research expects worldwide capex will have spiked in 2012, but then will level out in 2015 and 2016 at around the $345 billion mark. Spending to build new fourth generation long term evolution mobile networks likely will prove to have been crucial in 2012. 

As always, spending can vary significantly from region to region and between service providers in the same market. Looking just at Verizon, Credit Suisse Telecom has revised its calendar 2012 forecasts by reducing its wireless-capex estimate by $250 million to $8.7 billion. The calendar 2012 wireline-capex estimate remains at $6.3 billion for a total calendar 2012 capex forecast of $15 billion, Credit Suisse analysts reveal

The $1.7 billion fourth quarter wireline space represents a 13 percent quarter-over-quarter increase compared to an average eight percent quarter-over-quarter increase from calendar 2005-2011 and three percent year-over-year increase, compared to  an average four percent year-over-year decrease from calendar 2005-2011. On the other hand, the $2.6 billion wireless vertical's fourth quarter outlook represents a 21 percent quarter-over-quarter increase versus an average six percent  quarter-over-quarter increase from calendar years 2005-2011, and a 45 percent year-over-year increase versus an average one percent year-over-year increase from calendar years 2005-2011.


Edited by Jamie Epstein



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