Ovum reported last week that service provider network capex in Asia Pacific fell 13% in the first half of this year to $52 billion. The company credits the decline to spending cuts in Japan and China after sharp increases in capex last year, particularly by DoCoMo and China Unicom.
Ovum predicts that for the full year capex in the region will fall 10% to $114 billion.
Looking specially at China, Synergy Research and TeleGeography forecast network capex to peak this year at $46 billion or 27% of total revenue -- thanks to big 4G rollouts by China Telecom. The firm predicts capex will then drop 1-2 percentage points per year until it levels off at 20% in 2017. Last year capex accounted for 25% of service revenue.
Strong demand for 4G gear is actually being largely offset by continued declines in legacy technologies globally, according to an ABI Research report.
Another important factor pushing pressure on telco capex, says Ovum principal analyst Matt Walker, is that mobile operators have found plenty of ways to lower their cost base through such things as infrastructure sharing and SDN, which is just starting to take off.
But any conclusion that telcos are hitting peak capex would be premature.