Telcos and the investment challenge

Project Leader, Digiworld by IDATE

Capex momentum still positive, with telcos spending €237 billion worldwide

“CAPEX spending in 2012 was at its steadiest rate ever, coming in at 7% or slightly higher than in 2011”

IDATE has released the latest version of its annual report on telcos’ spending strategies around the globe. As always, the report is a chance to check in with an indicator that has become a key measure of the telecom industry’s health.

Carole Manero, who directed this report that draws on a unique global database of telco capex on fixed and mobile systems, says that, “spending in 2012 was at its steadiest rate ever, coming in at 7% or slightly higher than in 2011”. As a result, capex for telecom carriers worldwide in 2012 was higher than in 2008.

Mobile investment is driving growth

According to IDATE, spending reached €132 billion in 2012, which is €9 billion more than in 2011 (about €15 billion in total CAPEX growth between 2011 and 2012), and driven especially by telcos investing in migrating infrastructure to mobile broadband.

France, the biggest spender among EU Member countries

In Europe, France was the biggest spender among EU Member countries: €6.8 billion in 2012, only just ahead of the UK where telcos spent €6.7 billion

Breakdown of total CAPEX worldwide, in 2012

Worldwide CAPEX breakdown

Source: IDATE, July 2013

Emerging markets also driving CAPEX growth

According to IDATE, CAPEX in emerging countries (BRIC + MEA + LATAM) grew by nearly €9 billion in 2012, representing 57% of total growth between 2011 and 2012.
- Emerging market countries need to build their networks, including cellular, and upgrade them.
- These countries are relying chiefly on mobile infrastructure, due to a lack of landline infrastructure.
- Worth noting is that China has become the biggest spender in Asia-Pacific which is still by far the most dynamic region, with an aggregate capex in fixed and mobile systems of over €100 billion in 2012.

Streamlining Investments

Telcos have several ways of streamlining their investments, including resource pooling, outsourcing and even insourcing, even if we are not seeing any common thread emerging, either nationally or by carrier profile.

Telco spending patterns around the world, 2008-2012

CAPEX Dynamics

Source: IDATE, July 2013

This is an excerpt of our insight Telcos face to investment challenges being a part of our ongoing monitoring service Telecom Players & Markets Watch