Date: 29/09/2010

ABI: Mobile operator capital expenditure to grow by 3% in 2010

ABI Research has estimated that the mobile operator capital expenditure on key network items will grow by 3% in 2010 with the main contribution coming from equipment spending on Radio Access Network (RAN) equipment and also Core Network (CN). ABI says that equipment spending on RAN CAPEX is estimated to grow 3.5% while CN spending is expected to grow 8%.

The research has found that the RAN market has the lion’s share of equipment spending and the traffic from multimedia streaming, social network access and messaging is growing exponentially. The equipment expenditure on 4G CN equipment is expected to cross 3G CN equipment spending by 2012 with 3G and 4G CN equipment spending is likely to exceed US$12 billion in 2010.

“The long-term prospects for network infrastructure revenues are not rosy,” says ABI Research vice president for forecasting Jake Saunders. “The consequences can already be felt in the marketplace as competition cuts equipment prices and forces equipment vendors to consolidate. ABI Research expects there to be a material shift in operator capital equipment spending patterns by 2012.”

The release says that the mobile telecoms operators is a buyer’s market and a number of mobile networks belong to multinationals such as Vodafone, France Telecom, Telefonica and MTN. Vendors such as Ericsson and NSN have seen their margins squeezed by Huawei and ZTE. “There is a real possibility that one of the incumbent vendors might enter serious negotiation to merge with one of the upcoming Chinese vendors,” says Saunders. “Political factors may prevent such a union but the business sense stands.”