Global Service Provider Capex Will Grow Through 2014

Global capital investment by telecom and other service providers is growing, but nearly all the growth is found in markets other than the United States, a new forecast by Yankee Group suggests.

• Capital spending will increase 2.9 percent from 2010 levels, from U.S.$267.9 billion to U.S.$275.7 billion. Stabilization of the macroeconomic environment will lead to overall capital spending growth after two straight years of decline. In fact, we now forecast global telecom capital spending will continue to rise through 2014 (see Exhibit 1).
• EMEA and Latin America will grow capex the most. EMEA will grow by 5.1 percent, while Latin America—buoyed by strong demand for mobile broadband and value-added services (VAS) and aggressive investment by multi-national operators such as Telefónica—will grow by 6.2 percent.
• Asia-Pacific will remain resilient. The Asia-Pacific region, where last year we predicted a dramatic drop in spending among Tier 1 operators in China (in particular, China Mobile, China Telecom and China Unicom), proved to be remarkably resilient in their spending levels for 2010 and came in roughly flat (we had expected a drop of more than 10 percent). We expect to see a continuation of this investment cycle in 2011, with capex growing 4.4 percent year over year.
• North American capex will decline by 3 percent. North American operators will decrease spending slightly, from $70.8 billion in 2010 to $68.7 billion in 2011, making North America the only region reducing capex in 2011.