Worldwide telco capex to decline in 2016: Dell'Oro

Weakening capital expenditures (capex) among operators in China and Europe is expected to lead to overall telco capex year-on-year declines in 2016, according to a recently published report from Dell'Oro Group. The market research firm says that a slowing of constant currency revenue growth worldwide will keep capex intensity down as well.

"Diverging revenue and investment trends are expected in the short-term – however, carriers tend to balance investments between the wireline and wireless groups and align longer-term investment objectives with their respective revenue potential," said Stefan Pongratz, analyst at Dell'Oro Group. "In 2016, worldwide telco investments are expected to decline 6% in constant currency terms, primarily reflecting weaker investment trends in China and Europe. The anticipated capex decline, coupled with flattish revenue growth, will undoubtedly normalize capital intensity trends in 2016."

Worldwide capital intensity for the full year 2015 reached its highest point in five years, Dell'Oro says. That peak will not be maintained, however. The market research company says it expects combined manufacturer equipment revenues covered in the firm's access, mobile packet/RAN/voice, routers and Carrier Ethernet switches, service provider Wi-Fi, and optical transport reports will decline slightly in 2016.

The Dell'Oro Group Carrier Economics Report covers carriers' revenue, capital expenditure, and capital intensity trends. The report provides actual and forecast details by carrier, by region, by country (United States, Canada, China, India, Japan, and South Korea), and by technology (wireless/wireline).

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