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Europe

Euro Capex Caution

NOON -- The telecom equipment vendor community is mighty glad that the North American market has been showing signs of freer spending of late, because the purse strings are still very tight in Europe, as quarterly earnings and a research note from Avian Securities LLC have shown.

Ericsson AB (Nasdaq: ERIC), for example, noted during its first-quarter earnings call that operators in Europe were still reluctant to embark on major capex campaigns, and it showed in the Swedish giant's regional revenue numbers, with European sales down 20 percent year-on-year. And it wasn't alone in identifying Europe as a market overwhelmed by carrier caution. (See Carrier Caution Cuffs Ericsson in Q1.)

Now a research note from Avian has shown that, while capex-to-revenues ratios have remained relatively healthy among Europe's main Tier 1 operators -- BT Group plc (NYSE: BT; London: BTA), Deutsche Telekom AG (NYSE: DT), Orange (NYSE: FTE), Telefónica SA (NYSE: TEF), Telecom Italia (TIM) , and Vodafone Group plc (NYSE: VOD) -- at 14.9 percent, the aggregate level of capex of those big six players in 2010 is expected to be down 16 percent year-on-year to US$35.43 billion.

The money that is being spent is going on systems to support fixed and mobile broadband, and on managed services, notes Avian. (See BT Ramps FTTx Plans, Turns a Profit, for example.)

— Ray Le Maistre, International Managing Editor, Light Reading

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