Will telecom network investment dip in 2016?

Telecom network trends to watch out for 2014
A research report by Dell’Oro Group indicates that investment by telecom network operators in their infrastructure is likely to dip in 2016.

The report indicates that both China Mobile and Vodafone could look at decreasing their Capex (capital spending) plans in 2016. Both China Mobile and Vodafone could influence the Capex trends for global telecom markets.

“Though Europe and China are contributors to the constant currency investment growth trends for 2015, the report outlines potential risks for 2016 driven primarily by reduced expectations for China Mobile and Vodafone,” said Dell’Oro Group.

Despite increased uncertainty in the equity markets and continued downward revisions to global GDP outlook, worldwide telecom Capex maintains strong spend levels in 2015. Carriers invested in their networks at a healthy pace in the first half of 2015 and the majority of the carriers have not made any material revisions to their 2015 guidance.

The correlation between growth trends in the overall mobile and fixed telecom equipment market and carrier Capex weakened in H2 2014 and H1 2015.

“We attribute this to currency fluctuations than an underlying shift in how carriers are allocating their investments,” said Stefan Pongratz, Carrier Economics analyst with the Dell’Oro Group.

Worldwide Capex fell nearly $10 billion in dollar terms in H1 2015. However, investments grew at a low-single digit rate in constant currency.

The telecom report maintains its previous 2015 projections and continues to expect a high-single digit decline in carrier Capex and revenue in U.S. dollar terms while investments and revenue are expected to grow at a low-single digit rate in constant currency.

Baburajan K
editor@telecomlead.com