3G Infrastructure is Where Mobile Operators Spend Capex Now, But LTE is Coming

The global 2G, 3G, and 4G mobile network equipment market dropped 14 percent to just under $10 billion in the first quarter of 2012, following an eight percent increase the previous quarter, Infonetics Research says. 


Most seasoned observers would caution that a sharp quarter-to-quarter change, especially where unusually high fourth-quarter spending is followed by lower first-quarter spending, often is caused by an acceleration of orders in one quarter that is followed by lower spending the following quarter because planned expenditures were accelerated in the prior quarter.


Also, given the high amount of growth coming from China's operators, a sharp drop on the part of China Mobile can have significant impact on global spending. 


“The overall mobile infrastructure market took a beating in the first quarter of 2012,” notes Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research. “We saw weak 2G and 3G activity across the board, exacerbated by China Mobile’s dramatic GSM pause on the heels of extraordinary shipment levels in the previous quarter. 


Long Term Evolution (LTE) and WIMAX equipment revenue also declined sequentially. But LTE spending is up 128 percent from the 2011 first quarter. 


The LTE equipment market to grow to $17.5 billion in 2016.


Some 319 mobile operators have committed to LTE, and 72 LTE operators have launched commercial services in 37 countries, according to the Global Mobile Suppliers Association, That naturally will drive the increase in LTE infrastructure spending.