Telecom service providers are expected to invest $346 billion towards capital spending (Capex) in 2015, indicating a flat growth, said Ovum.
In 2014, Capex in fixed line telecom operations was 41 percent of $346 billion, while 59 percent was in wireless business of operators.
In 2015, Ovum forecasts that Capex of mobile operators will grow as compared with 2014, while fixed line telecoms’ Capex will decline. Ovum did not share specific break-up between wireless and wireline Capex for 2015.
Last month, telecom industry body GSMA said telecom operators will invest $1.7 trillion on Capex during 2014-2020.
ALSO READ: Telecoms to invest $1.7 trillion as Capex in networks during 2014-2020
Ovum says Capex of telecom operators are forecast to total more than $2 trillion between 2014 and 2019.
Capex will be weak for both the fixed and mobile segments in 2016 and 2017.
ALSO READ: Telecoms in Asia to spend $730 bn as Capex between 2014 and 2020: GSMA
Ovum is expecting a modest recovery in 2018–19 because of investment in fixed broadband, fixed cloud / data center, and mobile broadband upgrades in a number of large markets.
Matt Walker, principal network infrastructure analyst, Ovum, said: “CSPs have invested fairly heavily in 2013–14 across both fixed and mobile networks to support broadband rollouts. But this capacity will be absorbed, and technology and feature upgrades will drive Capex back up to about $354 billion by 2019.”
Telecoms have continued to spend heavily on networks in the last five years, plowing an average of nearly 18 percent of revenues per year into Capex.
ALSO READ: Mobile industry Capex to touch $1.1 trillion during 2013-17: GSMA
Telecoms Capex / revenue ratio will fall slightly to roughly 17.4 percent on average from 2014–19.
Network and tower sharing projects reached 100 by end Q3 2014, up 32 percent from last year.
Mobile operators are deploying software-defined radios for many years, which may lower the initial Capex for radio upgrades. Software-enabled features also appear in most other parts of the network, even in optical transmission and fixed broadband equipment.
Vendors typically spend 50–70 percent or more of product R&D on software.
Software-defined networks (SDN) and network functions virtualization (NFV) will lower operations and Capex, along with new service/feature deployment.
Internet content provider (ICP) Capex will reach nearly $57 billion in 2014 against $18.3 billion five years ago. Network Capex from the ICPs including Google, Apple, Facebook, Alibaba, and many others will be growing over the next few years.
Baburajan K
editor@telecomlead.com
