Slow growth ahead for telecom service provider revenues and capex
Â The telecoms industry rebounded in 2011, with service provider revenues and capex growing robustly compared to the same period in 2010, according to Ovum.
Â In a new report*, the independent telecoms analyst found that service provider (SP) capex and revenues grew an estimated 12 per cent and seven per cent respectively in 2011, with capex reaching US$314bn and revenues US$1,962bn.
Â However, the report forecasts that SP revenues will advance at a CAGR of 2.9 per cent over the 2010-2017 period, which is markedly down from the historic CAGR of 6.3 per cent achieved in 2004-2010. There is a similar slowdown with capex: capex expanded at a CAGR of 6.5 per cent in 2004-2010, but this will likely slow to 3.1 per cent in 2010-2017.
Â â€ś2011 represents a good bounce-back for the industry,â€ť noted report author and Ovum principal analystMatt Walker. However,Walkeradded that â€śmacroeconomic weakness is constraining top-line SP revenue growth. Service providers are coping with this reality by aggressively attacking their cost structures, both capex and opex.â€ť
Â On the capex front,Walkerexplained that SPs have a number of tools to control costs without necessarily sacrificing competitiveness: network sharing, software-based network elements and features, pay-as-you-grow contractual terms, joint procurement, and M&A will all be important.
Â According to the report, on the opex side, carriers are increasingly turning to outsourcing, which has helped expand the telco infrastructure services market to US$71bn.
Â Walkercommented: â€śThis shift of SPs’ opex to external vendors through outsourcing will bring new opportunities, particularly in the area of services. Also, mobile operatorsâ€™ share of total capex will continue to advance, from 56 per cent in 2011 to 62 per cent in 2017.â€ť
Â NOTES TO EDITORS
Â *Prepare for Slower-growing Telecom Revenues and Capex
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