It appears to be the case that everyone is tightening their belts across all of Western Europe, and no government or industry or company is immune. This is the case for the European telecommunications industry as well, though belt tightening during a period of massive mobile and wireless growth may seem to make this a counterintuitive reality. But numbers don’t lie, and ABI Research, in a new report, has uncovered a definite decline in mobile network capex.

A particular issue here is that the European telecommunications vendors, in most cases, find themselves scrambling to build out next generation 4G and LTE networks, which should translate into capex expanding rather than contracting. However, next generation spend has not been enough to offset the overall decline in spending. So what did ABI uncover?

First of all, mobile capital expenditure in Western Europe contracted 3.8 percent in the current quarter over the previous quarter, even though mobile operators are now actively building out coverage for 4G and, albeit to a lesser extent, enhancing capacity and coverage of existing 3G networks. Year over year growth was down significantly, measuring in at a 19 percent decline.

Some of the more interesting telecommunications vendor specifics from the report include the following:

• T-Mobile’s capital expenditure in the first half of 2012 was 4.9 percent lower than the previous year, although it continues to build out its LTE infrastructure. The operator’s capital expenditure in the Europe region as a whole was €792 million ($1.28 billion), a year over year decline of 8.8 percent. As is to be expected T-Mobile has cited the current difficult economic climate and tightened access to funds as the primary reason for the capex decline.
• The much larger Vodafone has trimmed its capital expenditures as well. Spending was down a modest £0.1 billion ($162 million) year over year but Vodafone never the less continues to make improvements to coverage and quality of service.
• At Telefonica capital investment was a mixed bag across Europe. In Spain, capex for the first half of 2012 was €787 million ($1.27 billion), down 12.7 percent year over year. Telefonica says that because it has achieved substantial “quality indicators improvements” it has been able to reduce capex. In the UK, on the other hand, for the first half of 2012 capex reached €375 million ($607 million) by June 2012 with a year over year increase of 9.5 percent. In Germany, capital expenditure was also increased, to €271 million ($437 million) in the first half of 2012, all of it driven by an expansion in LTE network deployment.
• France Telecom was also less thrifty than some of its competitors. Investment in networks, which represented 55 percent of the group’s capital expenditure in the first half of 2012, rose six percent. In France, there was a general acceleration of investment in very high-speed mobile 4G and an increased investment in mobile capability. Even in Spain, which remains in a severe economic condition, capex increased €40 million ($65 million) year over year, and was linked directly to the acceleration of its mobile access network renewal program.

Regardless of some of the increases noted above, overall capex spend has declined. “Overall capital expenditure for the region is expected to drop a non-trivial 12 percent to €8.9 billion ($14.4 billion) for the year. Western European carriers are at different stages in development which will very likely impact 4G adoption patterns,” notes Jake Saunders, vice president for forecasting at ABI Research.