Strong growth continues for North American wireline capex in 2Q06, says report

August 7, 2006 London -- Ovum-RHK today posted its analysis of second quarter 2006 revenue and capital spending by North American network operators. Wireline operators increased capital spending by 16% versus the second quarter of 2005, following a 22% increase in 1Q06. This was despite wireline revenue declines of 5% to 6% versus the first half of 2005, say analysts.

Mobile operators, meanwhile, reduced capital spending by 18% versus last year, despite a revenue increase of 12%.

Second quarter 2006 highlights for North American network operators include:
• Wireline revenues of $43.6 billion, down 5% versus 2Q05;
• Wireline capex of $7.5 billion, up 16% versus 2Q05;
• Mobile revenues of $32.8 billion, up 12% versus 2Q05; and
• Mobile capex of $5.3 billion, down 18% versus 2Q05.

"Wireline capex in North America increased 18 percent in the first half of 2006 compared to last year," reports John Lively, vice president, forecasting, at Ovum-RHK. "However, both AT&T and Verizon again posted lower revenue figures than last year, which suggests continued problems with their legacy long-distance services, and that payoffs for the increased capital spending remain in the future."

Ovum-RHK's analysis also shows that mobile operators cut quarterly spending significantly in the second quarter, to $5.3 billion, despite continued double-digit growth in mobile services revenue.