Chinese Capex to Hit How Much?

10:15 AM -- Intense competition in the 3G market and the anticipated introduction of new players into the broadband sector are expected to lead China's three main operators to focus their 2012 spending on more advanced mobile broadband access and fiber-based fixed access systems, reports CapitalVue.

Taking projections from various analysts, the report suggests that the combined capex budgets of China Mobile Ltd. (NYSE: CHL), China Telecom Corp. Ltd. (NYSE: CHA) and China Unicom Ltd. (NYSE: CHU) will be more than 300 billion yuan renminbi (US$47.6 billion) in 2012.

How much?

If that figure is in any way accurate, then it blows the projections made by ABI Research out of the water (in a good way). The research house issued a press release in late January estimating that the Asia/Pacific capex total in 2012 (including China as well as Japan, South Korea and other markets) would go up by 5.7 percent to $58.8 billion.

If the Chinese carriers alone get anywhere close to $47 billion in spending this year then ABI's figure would need to head north by quite some way.

If Asia/Pac's capex is hitting the up ramp and North American carrier purses get loosened soon, as predicted late Monday, then 2012 might prove a better year than expected for the vendor fraternity. (See Carrier Capex Could Rebound Quickly.)

I notice, though, that no-one is expecting a major ramp in European capex and it's much harder to imagine that's going to happen any time soon.

— Ray Le Maistre, International Managing Editor, Light Reading

JohnMike 12/5/2012 | 5:43:24 PM
re: Chinese Capex to Hit How Much?

As a touchpoint, U.S. carrier capex (wireline & wireless) should come in the low $60 billion range ($62-63 B), that's up around 5% over 2011.

Wireline includes local telcos (Tier 1, Tier 2/3, rural), CLECs, long distance carriers and cablecos.

Most of the growth is in wireless with wireline staying flat compared to last year.

chips_ahoy 12/5/2012 | 5:43:23 PM
re: Chinese Capex to Hit How Much?

Thanks for the datapoint JM.

jggveth 12/5/2012 | 5:43:22 PM
re: Chinese Capex to Hit How Much? Verizon and AT&T make up over half and have guided flat at best. So you are saying everyone else is up 10% or more?
JohnMike 12/5/2012 | 5:43:17 PM
re: Chinese Capex to Hit How Much?

Good question!

The way to think about this is to disaggregate Verizon's and AT&T's wireline and wireless capex.

For both companies, wireline spending is flat to down but wireless capex is expected to be up by +5%. Since the proportions of wireline and wireless capex for both companies are not equal, you can have a flat projection YtY.

When you blend the respective wireline and wireless network investments of all the other carriers, you find that wireline capex is flat but wireless capital investment is prrojected to increase at close to +10%.

That's how I get a mid-single-digit increase in overall U.S. carrier capex for 2012 ... give or take a percent or two!

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