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Telecom Capex ‘Flat’ In 2016, But Growth Coming

There are some clear issues that have plagued carriers in the US over the last year. The first is the level of competition between the carriers which has resulted in the market becoming much more competitive for the carriers to operate and be successful in. Then there is the issue of 5G. All of the major carriers seem intent on bringing 5G solutions to the market and as soon as they can. While this is good for consumers, it is also a costly endeavor from the perspective of the carriers, which means those carriers need to save in order to be able to reach their 5G goals and ambitions. Generally speaking, both of these issues can be somewhat extrapolated to other markets around the world as well.

READ MORE: TELECOM DICTIONARY – CAPEX

As a result, it should not be too much of a surprise to learn that that the IHS has stated in a research note today that they expect worldwide telecom capex to be “flat to very moderate” for 2016. While the expectation is at best ‘very moderate’, that does not necessarily mean that all regions performed in the same manner. For instance, IHS notes that they expect markets like North America, Europe, the Middle East, Africa, the Caribbean and Latin America to see some growth, however, that growth is offset by the decline in Asia Pacific. A result which overall flattens out the wider global capex figure for the year and one which IHS notes is an example of the “regional and national cycle de-synchronization” of the wider market.

There are some definite positives from this latest information though. Firstly, the same report does expect that over the following four years (through to 2020), the level of capex will steadily increase. Furthermore, by 2020, the level will reach a similar level to what had been seen in 2014 and before capex substantially dropped in 2015. Which means that while some may consider ‘2016 being flat’ a negative, the flatness does further highlight that while carriers are seemingly spending less, they are not spending as less as they did last year. Likewise, as less as many analysts predicted for this year, earlier in the year.

So this itself does further add weight to the notion that growth should be expected over the next four years, even if it is only considered flat for this year. Of course, much of that growth by 2020 will be based around the expectation of the deployment of 5G. So while 5G may be one of the contributing factors for 2016 not reaching higher levels of capex spending, in the grander scheme of things, it is likely to be one of the contribution factors which fuels capex levels over the next four years and certainly in 2020 and beyond.

Source: Android Headlines

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