NA Capex Hits $63B in '05NA Capex Hits $63B in '05

CAMPBELL, Calif. -- Publicly owned service providers inNorth America spent just under $63 billion on capital expenditures in 2005,an increase of 8% from 2004, and are projected to increase 4% to over $65billion in 2006, according to Infonetics Research's Service Provider CapexAnalysis, North America report.

This increase was driven primarily by significant investments made byCingular, whose capex jumped 117% from 2004 to 2005, and by Sprint, Verizon,and AT&T. More investments were made in wireless equipment than wireline,but spending on both is up.

Of the capex going to telecom and datacom equipment, the top threeinvestment areas are voice, mobile RAN, and optical equipment. Voice networkspending is generally trending up in dollars and as a percentage of capexdue to increased spending on broadband, next gen voice, wireless networks,and the move to IP/MPLS/Ethernet networks.

"As we expected, 2005 ended on a healthy note with a capex-to-revenue ratioof 17% in North America," said Stéphane Téral, directing analyst atInfonetics Research. "Although we expect this trend to continue into 2006,the recent wave of consolidation among ILECs will result in 56% of totalcapex owned by just AT&T and Verizon."

North American Capex Highlights

Infonetics' projection for 2005 from one year ago was only 2% lower thanactual results for capex and 0.03% lower for actual revenue.

Infonetics Research Inc.