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Report: Euro Capex Decline Slowing

Light Reading
News Analysis
Light Reading
4/25/2003

Europe's carriers will spend less this year than in 2002, but the outlook is more hopeful than it was last year, according to a recent report from Infonetics Research Inc.

The firm estimates that about 79 service providers throughout Europe will shell out the equivalent of US$41.1 billion on new infrastructure and equipment in 2003. That represents a drop of 16 percent from last year's $49.1 billion, which in turn was a drop of 32 percent from 2001's level of $72.1 billion.

"We think the situation is stabilizing," says Infonetics analyst Richard Webb, co-author of "Service Provider Roll Call and CapEx Analysis, Europe 2003." As in North America, carriers are spending, but only where they see an assured revenue return. "We see only what carriers call 'success-based spending,' " he says.

So where's the money going? Primarily to maintain and improve existing networks, Webb asserts. Service providers also will focus this year on a couple of innovations, primarily Multiprotocol Label Switching (MPLS), which is viewed as an enabler for squeezing more revenues and efficiency out of what's in place.

Infonetics sees more than half the year's spending coming from Europe's top incumbents, which the firm says will spend the following amounts:



The carriers that spend the most are also the ones whose financials remain most problematic: France Telecom and Deutsche Telekom continue to struggle with big debt burdens (see France Telecom: Not Out of the Woods, Telekom Drops Bomb on CeBIT, and France Telecom: Beaucoup Losses).

Webb says the European carriers will have to bite the bullet before things get better. The year may see some big carriers forced to part with assets, such as mobility divisions, which up to now they've held on to jealously. There's room for consolidation of some players. Others will have to scale down planned pan-European rollouts to more regional ones that better fit their budgets.

Webb says these trends are already evident in the progress of companies such as KPNQwest NV (Nasdaq/Amsterdam: KQIP), which has narrowed its focus from all of Europe to the Benelux countries; and in the formation of TeliaSonera AB (Nasdaq: TLSN) from two Scandinavian players, Telia and Sonera, late in 2002.

Bottom line? "The worst is over but we're not in the good times yet," Webb says.

— Mary Jander, Senior Editor, Light Reading

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BobbyMax
BobbyMax
12/5/2012 | 12:09:57 AM
re: Report: Euro Capex Decline Slowing
Capex is going down all over the world. The Capex expenditure is going down in the US, Europe, and the South East Asia. The expenditure has been going down at the rate of 20%-to-30% in almost all countries. Us has been cripled by reduction in Capex. Both IXCs and ILECs are experiencing erosion in profitability.
gea
gea
12/5/2012 | 12:09:54 AM
re: Report: Euro Capex Decline Slowing
BobbyMax:

All your base are belong to us.
cyber_techy
cyber_techy
12/5/2012 | 12:09:52 AM
re: Report: Euro Capex Decline Slowing
Author: BobbyMax Number: 1
Subject: Declining Capex All Over The World Date: 4/26/2003 12:38:24 AM


Capex is going down all over the world. The Capex expenditure is going down in the US, Europe, and the South East Asia. The expenditure has been going down at the rate of 20%-to-30% in almost all countries. Us has been cripled by reduction in Capex. Both IXCs and ILECs are experiencing erosion in profitability.

=================================================

So, is this a news or a comment?
dljvjbsl
dljvjbsl
12/5/2012 | 12:09:51 AM
re: Report: Euro Capex Decline Slowing

It shows something very much of the desperation of this industry when it is headline news that the first derivative of Capex decline rate is lessening. I suppose this means the the second derivative of Capex is increasing.

Now that is news!

The second derivative of the Capex change rate in Europe is increasing!!!
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