Telecoms investment to dip 6 percent in 2016

Telecom network operators’ investments are expected to dip 6 percent in constant currency terms in 2016.

The decline in Capex (capital expenditure) is primarily reflecting weaker investment trends in China and Europe. China Mobile, China Unicom and China Telecom are the top three telecom operators in China.

“The anticipated Capex decline, coupled with flattish revenue growth, will normalize capital intensity trends in 2016,” Stefan Pongratz, analyst at Dell’Oro Group.

Capital investment intensity increased for 2015, reaching a new high for 2010-2015.

The outlook for the equipment vendors is tilted downward. The manufacturer equipment revenues from access, mobile packet / RAN / voice, routers and carrier ethernet switches, service provider Wi-Fi and optical transport will decline slightly in 2016.

Telecom network operators are facing slow down in the growth of revenue and subscribers. As a result, telecoms are realizing that network investments are essential to ensure sustainable leading market positions and are accelerating the shift toward fiber, IP, LTE, and the Cloud.

ABI Research said the market will deploy more than one million Sub-6 GHz licensed backhaul links by 2020. Sub-6 GHz will challenge microwave and millimeter waves for the largest market share of 35 percent in 2020. The combined wireless backhaul equipment revenues from Sub-6 GHz links and millimeter waves make up nearly 57 percent of the total backhaul revenue in 2020.

Technavio says the global Ethernet switch and routers market is set to reach close to $16.83 billion by 2020, growing at a CAGR of more than 10 percent, from $14.85 billion in 2015.