Service provider (SP) capital expenditure (capex) has been hit hard by recent economic troubles, falling 8% in 2009 and on track for another 4% drop in 2010.
Yet Ovum expects global SP capex to rise 9% in 2011, to $303 billion. SP revenues, after declining 2% in 2009, are growing again, slowly: we expect 2% growth in 2010 and 3% in 2011, to $1,854 billion. Pockets of strong growth exist, but telcos and vendors alike must be picky and open to reinventing business models as industry dynamics evolve towards 2020.
Improved economy and LTE support 2011 recovery; India on the mend
The telecoms industry remains challenged, and growth in most places is modest at best, but things are starting to improve. Looking at data for the four-quarter period ended 2Q10, global revenues grew 3.5% year-on-year (YoY), compared to a 2.0% decline in 3Q08–2Q09.
Capex fell 5.3% YoY in 3Q09–2Q10, a worse result than 2Q09 but improved from the previous three quarters, where YoY declines were in the upper single digits. Regionally, Asia-Pacific’s revenue strength has been the early driver in the global market’s pickup; India, though, was one key factor in the recent fall in global capex, along with the South & Central America region.
Looking ahead, Ovum has just updated its forecast of SP revenues and capex (see our forthcoming “Market Forecast spreadsheet: Telecom operator revenues and capex”, to be published in October 2010). This report extends through 2015, segmented by region, and split into fixed and mobile SP types.