Telecom carrier capex to grow 4.7 per cent in 2011

Global telecom service provider capex bottomed out at $289 billion worldwide in 2010. There is a dip by three per cent, following a five per cent decline in 2009. Meanwhile, telecom carrier revenue growth resumed, increasing 3.5 per cent to $1.72 trillion in 2010, a 3.5 per cent increase over 2009, finds research firm Infonetics Research in its latest report.

Stephane Teral, principal analyst for mobile and FMC infrastructure at Infonetics Research said, "As we correctly predicted, 2011 is shaping up as the first year of a new three-four-year investment cycle that should lead us to a plateau in 2014. However, don't get too excited because we're talking about low single-digit percent capex growth, not the double-digit growth rates of 2006 to 2008, because overall telecom service revenues just aren't there to justify significant hikes, despite increasing usage of both wireline and wireless broadband."

Infonetics forecasts carrier capital expenditures to increase 4.7 per cent in 2011. In 2010, growth in global carrier spending on WiMAX equipment (+42 per cent), IP routers and carrier Ethernet switches (+21 per cent), and broadband aggregation equipment (+7.3 per cent) was not enough to offset the declines in other network equipment spending, particularly for mobile infrastructure, which dropped 11 per cent and still makes up about 40 per cent of total carrier spending.

"Mobile network modernization and migration to LTE, along with national wireline broadband initiatives in various regions, will drive this investment cycle," expects Stéphane.

In 2011, Infonetics expects growth in all telecom equipment sectors it tracks. Revenue growth resumed in 2010 and will continue throughout the forecast period. Infonetics' telecom carrier capex and revenue forecasts for 2010, made in 2009, were within two per cent and 0.7 per cent, respectively, of actual 2010 capex and revenues.