Stephane Teral, senior research director, mobile infrastructure and carrier economics, IHS Markit, has shared a chart indicating that Capex (capital expenditure) by telecom operators will start growing from 2016.
The chart on telecom Capex shows steady growth in investment in the next four years. But telecoms’ Capex will take four long years to reach the Capex levels in 2014. The year 2020 is expected to see the launch of 5G.
The telecom statistics on telecom investment trends in the next four years revealed by HIS Markit is a major development telecom network vendors such as Huawei, Ericsson, Nokia, Cisco, ZTE, HPE, IBM, Juniper Networks, among others.
IHS Markit has revealed two important informations for both telecom network operators and telecom equipment vendors. First, there will be flat to very moderate growth in service provider capital expenditures (Capex) in 2016. Second, the worldwide service provider Capex spending is slowly crawling back to 2014 levels.
Asia Pacific is the world’s largest telecom spender and revenue contributor. Asia Pacific is home to telecom operators such as China Mobile, Bharti Airtel, Vodafone, etc.
For 2016, large differences in regional investment agendas point to regional and national cycle de-synchronization—and, consequently, global flatness to very moderate growth in capital expenditures. This is a result of low-digit growth in North America, Europe, the Middle East and Africa (EMEA) and the Caribbean and Latin America (CALA) that is offset by a China-driven decline in Asia Pacific.
Worldwide telecom service provider Capex to increase 0.7 percent to $341 billion by the end of this year, mainly propelled by a much-needed wave of investment in wireline broadband — for example, fiber to the X (FTTX) — in Europe.
The report on telecom investment said that spending on every type of hardware equipment except wireless and time-division multiplexing (TDM) voice will rise in 2016. Capitalized software that is captured in the non-telecom / datacom category — around half of total Capex — is expected to grow by double-digit percentages.
The Growth rate in Capex by telecom service provider slowed down in 2015 followed by a pickup in 2016. The report noted that picking up of growth in telecom Capex signals long-term flatness triggered by the combination of moderate desynchronized regional investment cycles, themselves triggered by very distinct agendas.
Telecoms continue to account for the lion’s share of Capex, at more than 88 percent. Asia Pacific will remain the world’s largest spender with 42 percent share, while North America stays roughly even, followed by EMEA and CALA.
The report said telecom service revenue picture remains mixed and contrasted across geographical regions. Global telecom service revenue fell 4 percent in 2015. Global telecom service revenue is expected to grow by over a percentage point to $1.93 trillion in 2016. Asia Pacific is the world’s largest telecom revenue contributor, shadowed closely by North America.
North America, which is the home for Verizon, AT&T, T-Mobile, etc. is the most profitable telecom market for service providers in the world.