European telecoms lower Capex on wireless infrastructure
Telecom Lead Europe: Wireless equipment makers are going to face tough times. ABI Research said European telecom operators are lowering their Capex on mobile infrastructure. This is despite their 4G expansion plans.
After Americas, Europe is the most prominent destination for telecom vendors such as Ericsson, Nokia Siemens, ZTE, Huawei, Alcatel-Lucent, etc. Their quest to revive gains in emerging telecom markets is yet to take off in a big way.
Lowering of telecom Capex will have a cascading impact on other markets as well. Most of the telecom operators have presence in emerging markets and the Americas.
Recently, Gartner said mobile services are expected to generate 37 percent of total worldwide consumer technology spending in 2012 — that is $0.8 trillion — rising to almost $1 trillion by 2016. Mobile phones will account for 10 percent of total spending in 2012 — that is $222 billion — rising to almost $300 billion by 2016. Similarly, entertainment services — cable, satellite, IPTV and online gaming, will account for 10 percent of total consumer spending on technology products and services in 2012, at $210 billion, rising to almost $290 billion in 2016.
Gartner predicts that consumer spending on mobile apps stores and content will rise from $18 billion in 2012 to $61 billion by 2016, and that spending on e-text content (e-books, online news, magazines and information services) will rise from $5 billion in 2012 to $16 billion by 2016.
ABI Research said mobile Capex of telecom operators in Western Europe contracted 3.8 percent quarter-on-quarter.
Year-on-year growth was also down significantly at 19 percent.
“Overall capital expenditure for the region is expected to drop 12 percent to $14.4 billion for the year. Western European carriers are at different stages in development which will very likely impact 4G adoption patterns,” said Jake Saunders, VP for Forecasting at ABI Research.
T-Mobile’s capital expenditure in the first half of 2012 was 4.9 percent lower than the previous year, though it is prioritizing LTE roll-out. The telecom operator’s capital expenditure in the Europe region as a whole was €792 million, a y-o-y decline of 8.8 percent. The operator cited the difficult economic climate and tightened access to funds.
Vodafone trimmed its capital expenditure. Spending was down £0.1 billion y-o-y but the investment continued to make improvements to coverage and quality of service.
France Telecom’s investment in networks represented 55 percent of the group’s capital expenditure in the first half of 2012, up 6 percent. In France, there was an acceleration of investment in 4G and an increased investment in mobile capability. In Spain, an increase of €40 million y-o-y was linked to the acceleration of the mobile access network renewal program.
Telefonica’s capital investment was a mixed bag in Europe. In Spain, Capex for the 1H-2012 year was €787 million, down 12.7 percent y-o-y. The operator claims that because it has achieved substantial quality indicators improvements. It meant the operator could reduce Capex. In UK, Capex reached €375 million by June 2012 with a y-o-y increase of 9.5 percent. Telefonica UK improved coverage and capacity of its mobile network, and refarmed 900 MHz spectrum in urban areas. In Germany, the boost in capital expenditure of €271 million in 1H-2012 was driven by an expansion in LTE network deployment.
(pix for this article is sourced from Gigaom)