Telecom operators will look to slash spending in 2012 owing to weak revenue growth, according to a report from Ovum.
Telecom operators’ revenue growth is expected to fall to a CAGR of just 2.9% between 2010-2017, down from the CAGR of 6.3% achieved in 2004-2010, according to a report from analyst firm Ovum.
Ovum also predicts a “similar slowdown” with capex growth, which is expected to slow to 3.1% in 2010-2017 compared to a CAGR of 6.5% in 2004-2010.
“Macroeconomic weakness is constraining top-line service provuider revenue growth. Service providers are coping with this reality by aggressively attacking their cost structures, both capex and opex,” said Matt Walker, principal analyst, Ovum.
On the capex front, Walker explained that SPs have a number of tools to control costs without necessarily sacrificing competitiveness. These include network sharing, software-based network elements and features, pay-as-you-grow contractual terms, joint procurement, and M&A.
On the opex side, carriers are increasingly turning to outsourcing, which has helped expand the telco infrastructure services market to $71 billion.
“This shift of SPs’ opex to external vendors through outsourcing will bring new opportunities, particularly in the area of services. Also, mobile operators’ share of total capex will continue to advance, from 56% in 2011 to 62% in 2017,” Walker added.
While capex and revenue growth is due to fall between 2010-2017, operators experienced a “bounce-back” in 2011, according to Walker.
Indeed, service provider revenues and capex grew robustly compared to the same period in 2010.
Operator capex and revenues grew by an estimated 12% and 7% respectively in 2011, with capex reaching $314 billion and revenues $1.96 billion.
“2011 represents a good bounce-back for the industry,” said Matt Walker, principal analyst, Ovum. However, he added that “macroeconomic weakness” is constraining top-line SP revenue growth. “Service providers are coping with this reality by aggressively attacking their cost structures, both capex and opex,” he said.
