Outlook Brightens for Euro Carriers

European incumbent service provider capex spending down 12% to €33.3B, revenue up 2% in 2003

October 30, 2003

2 Min Read

LONDON -- European incumbent service providers' capital expenditures will drop to EUR33.3 billion in 2003, a 12% reduction from 2002, and their revenue will increase by 2%, according to Infonetics Research's latest market research report, Service Provider Roll Call and CapEx Analysis, Europe 2003.

"This year's 12% capex cut by European incumbent service providers is significant given that they slashed capex spending by 30% just last year," said Richard Webb, directing analyst for Infonetics Research and lead author of the report. "These additional cuts bring the incumbent capex-to-revenue ratio back down to a healthy 12%, which is right about where they need to be."

Competitive service providers in Europe are making even more severe reductions, cutting capex spending 37% in 2003. This will have a dramatic impact on their overall capex-to-revenue ratio as they look to stabilize their balance sheets and focus on increasing ARPU following several years of expensive network rollouts. Cable service providers have made less severe cuts, but nonetheless continue to focus on maximizing their current infrastructure rather than expanding their network coverage.

A reduction in capital expenditures generally has a short-term negative effect on vendors selling to service providers, but capex-to-revenue ratios of around 15% prepare service providers for longevity and are a sign of financial health, which is positive for the service provider market overall for the long term.

"Though this does not necessarily show that European service providers are truly up and running, for the most part the survivors are at least back up off their knees and can look forward to a more positive 2004," Webb stated.

Infonetics Research's report tracks 78 incumbent telephone, competitive, cable, and Internet service providers in Europe, including Cable & Wireless, Deutsche Telekom, Equant, Lambdanet, Netia, NTT Europe, tele.ring, TeliaSonera, Tiscali, and UPC.

The report provides capital expenditure analysis on public facilities-based service providers, including:

  • Revenue for 2001 and 2002, and forecasts for 2003

  • Capital expenditures for 2001 and 2002, and forecasts for2003

  • Capital expenditure-to-revenue ratio for 2001, 2002, and2003

  • Notes section for management guidance and forecastinformation

Profiles and up-to-date information on the 78 public and private facilities-based service providers and the services they offer are also included in the report, covering:

  • Network overview

    • Manufacturers used for routers, multiserviceswitches, broadband aggregation, optical, next gen voice

    • Number of POPs, COs, data centers

    • Backbone technology: ATM, IP, MPLS

  • Business and residential data services (e.g., frame relay,leased lines, ATM, VPN, managed firewall, fixed wireless, mobile wireless)

  • Carrier data services

  • Hosting services: colocation, shared and dedicated hosting,storage

  • Voice services: local and long distance TDM, mobile, voiceover packet

  • Demographics (HQ contact information, alliances/subsidiaryrelationships, number of employees, territories covered, technical executivecontact)

Infonetics Research Inc.

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