The research out fit Ovum has a report out saying that growth is going to be slowing down for the telecommunications sector as a whole. In 2011 capex and revenues grew at a nice clip of 12% and 7%, respectively, a solid bounceback. However, Ovum says that the overall trend for 2010-2017 will be more like capex growth of 3.1% a CAGR of 2.9%.
It’s not the first bit of doom and gloom we’ve heard lately about the road ahead. Juniper and Acme Packet both ended 2011 on a weak note, blaming skinflint large US service providers. Ok, maybe they didn’t use the word skinflint, but they were probably thinking it.
Part of the trouble is of course the macroeconomic environment, which is steadfastly refusing to fix all our problems for us. But when you’re talking about the overall telecommunications space, you’re still mostly talking about traditional revenue streams like voice and those are going to be pressured for a long time. Those who depend on such revenues in a big way are going to be trimming expenses for the entire decade.
The bigger story than slower overall growth trends though is the massive shifts in spending within the sector. Wireless and colo/cloud are getting all the love while networks and particularly legacy systems are going to be increasingly squeezed for incumbents, and it’s much more than a passing fad.
I am quite interested though to see how the independent fiber operators see 2012 developing. Are they battening down the hatches or do they sense an opportunity to take advantage of the situation? Earnings reports spread over the next month or so will tell the tale.
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I did an in depth analysis of capex trends over last 5 years… basically capex by large operators was flat or only slightly up. If you pull out wireless capex, where the growth was, spending on other areas was already down. But if you then look at capex by the competitive fiber guys, whole different story.
I don’t know the Ovum analysis but I would be surprised if the growth in the last 5 years was materially different than what they are projecting for the next five years. In your article, you cite 2011 only. But look at 2007-2011 and it wasn’t that great.