According to analyst Simon Sherrington, global annual capex is set to decline by about 0.7 percent in 2009 to around $297 billion, with steeper declines in mature markets such as the U.S. and Western Europe offset by investments in growth markets such as China and India, and regions such as Africa and the Middle East. (See Telefónica Slashes Capex by 10%, AT&T Cuts Capex by up to $3B, LR Poll: Capex to Crash in '09, China Mobile Preps 3G Surge, India Adds 15M Mobile Subs in January, Top 10 Telecom Markets: Asia, and China Awards 3G Licenses. )
But the contraction should be short-lived. In his report, "After the Freeze: A Five-Year Telecom Capex Forecast," Sherrington forecasts an increase in global spending in 2010 and in the following three years, with the global capex total hitting $350 billion in 2012.
So is this good news for the vendor community? Not necessarily, notes the analyst, who sees good times ahead for the likes of Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763). (See Huawei, ZTE Predict 2009 Growth.)
"The fact that much of the growth is coming from China is not great news for Western vendors – local vendors can be expected to win the lion's share of the spending. They may also do well in India, where the operators are likely to be very cost-conscious... The Chinese vendors' aggressive pricing strategies will stand them in good stead," notes the analyst.
The investment trends also favor those companies focused on hardware and software for mobile networks. Sherrington expects the share of global capex invested by mobile operators to rise from about 55 percent of the global total to more than 59 percent by 2013. (See Ericsson: Mobile Sector Is Resilient.)
That still leaves good opportunities for fixed network specialists, though, he adds. "Strong revenue streams will be available in the coming years as a result of increasing fiber deployment," though a growing portion of carrier spending will be heading the way of civil and engineering companies as operators invest in digging trenches and laying cables. (See Asia's High Fiber Diet, FTTH Europe: Greece Plans €2B Rollout, and FTTH Europe: Slow Growth Forecast.)
— Ray Le Maistre, International News Editor, Light Reading
For more on this topic, check out:
- The Light Reading Insider report:
— After the Freeze: A Five-Year Telecom Capex Forecast