Telecom Lead India: Telecom managed services grew 8 percent year-to-year in second quarter.
The Telecom Infrastructure Services (TIS) market grew 3.2 percent in second quarter, according to Technology Business Research.
Strong momentum in managed services and LTE deployments contributed to the growth.
“Managed services, which grew 8 percent year-to-year, led the TIS market in Q2,” said Chris Antlitz, an analyst in TBR’s Networking & Mobility Practice.
This highlights how integral these services have become to operators who are actively searching for ways to reduce Opex amid these uncertain economic times. Maintenance services also registered growth in the quarter, fueled by the need to support newly installed infrastructure for coverage and capacity.
Professional services registered a slight decline.
TBR believes the decline in professional services will be short-lived, as operators will require assistance in integrating LTE equipment (including small cells) with their legacy infrastructure and will require assistance in back-office system overhauls.
Consultants will be in high demand as operators in developed markets shift their focus from deployment of new technologies to implementing business models that can fully leverage and monetize those assets.
From a geographic perspective TIS revenue grew in all regions except EMEA, where economic uncertainty keeps operators in a state of cautiousness. Though investments continue to be made in network modernizations and managed services — with Ericsson as the largest beneficiary — operators in the region are taking a hard line on maintenance pricing and delaying large professional services contracts until stability returns to the market.
Alcatel-Lucent’s and Nokia Siemens’ TIS businesses suffered a second straight quarter of year-to-year declines. The decline comes as both Tier 1 vendors start to exit or restructure unprofitable managed services contracts and steer resources away from non-core countries.
While restructuring is a painful and slow process for vendors, TBR believes it is necessary to make these vendors more nimble and better able to capture market opportunities. However, vendor de-emphasis on select markets and types of services opens up opportunities for rivals to step in and take market share.
For the remainder of 2012, TBR expects activity in APAC to slow as Japan and South Korea complete their initial LTE builds and China and India stall TD-LTE deployment until at least 2014 due to a variety of political factors. Growth in EMEA and CALA will also slow as large projects initiated in 2010 and 2011 wind down. North America will drive TIS growth through 2012 and 2013 as the deployment of nationwide LTE networks continues in the U.S. and Canada.
Tier 1 North American operator Capex budgets for the two remaining quarters in 2012 will sharply increase from 2011 spend levels as network investments accelerate. As the primary supplier of LTE equipment to six of the seven Tier 1 operators in the region, Ericsson will be the primary beneficiary of this capex spend spike.
In 2010, Infonetics Analytics said mobile network outsourcing is growing much faster than fixed (wireline) outsourcing: in 2008 revenue from mobile and fixed network outsourcing was roughly the same; by 2014, mobile network outsourcing will grow to account for 61 percent of all network outsourcing. Much of the growth in outsourced services is coming from EMEA (Europe, Middle East, Africa) and Asia Pacific, and to a lesser extent, Central and Latin America.
