Telecoms growth will slow, despite 2011’s industry rebound

Telecoms service provider revenues will slow between 2011 and 2017, despite a healthy industry rebound in 2011, according to analyst firm Ovum.

In a new report, ‘Prepare for Slower-growing Telecom Revenues and Capex,’ the firm says that telecoms service provider revenues and capex grew an estimated seven and 12 percent respectively in 2011, with revenues reaching US$1,962 billion and capex reaching US$314 billion.

This represents an increase over the 2010 figures.

However, Ovum predicts that service provider revenues will advance at a CAGR of 2.9% over the 2010-2017 period - a marked decrease from the historic CAGR of 6.3% observed in the 2004-2010 period.

According to the firm, capex will experience a similar slowdown. In the 2004-2010 period, capex expanded at a CAGR of 6.5%, but this will likely slow to 3.1% in 2010-2017.

Ovum principal analyst, Matt Walker, said: “2011 represents a good bounce-back for the industry,” but “macroeconomic weakness is constraining top-line SP revenue growth. Service providers are coping with this reality by aggressively attacking their cost structures, both capex and opex.”

In terms of capex, Walker said that telecoms service eproviders have a number of tools to control costs without necessarily sacrificing competitiveness. These include network sharing, software-based network elements and features, pay-as-you-grow contractual terms, joint procurement and mergers and acquisitions.

The report said that in terms of opex, carriers are turning to outsourcing, which has helped expand the telco infrastructure services market to US$71 billion.

“This shift of service providers' opex to external vendors through outsourcing will bring new opportunities, particularly in the area of services. Also, mobile operators’ share of total capex will continue to advance, from 56% in 2011 to 62% in 2017,” Walker said.