Operator capex to return to growth in 2018
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Global operator capex will to return to growth this year after two consecutive years of decline, research firm Dell’Oro predicts.
The company is expecting a compound annual growth rate of 1% in constant currency terms between 2017 and 2020. This is an improvement on the company’s previous forecast for the period.
The more optimistic projection is largely due to signs of improvement in both the US and Chinese markets, Dell’Oro carrier economics lead Stefan Pongratz said in a blog post.
But total capex spend in China [Figure 1] is still expected to decline year-on-year in 2018 and stay flat in 2019 before returning to growth in 2020.
Pongratz noted that constrained operator revenue growth is expected to be one of the primary inhibitors of further capex acceleration that could be expected with the introduction of 5G.
Currency adjusted operator revenues are projected to remain flat between 2017 and 2020, with operators expected to struggle to find new revenue streams to offset slower smartphone revenue growth.
Likewise, while the IoT has long-term revenue generation possibilities, there is expected to be limited benefit over the next few years. Dell’Oro estimates that carrier IoT revenues will account for just 2% of total mobile revenues by 2020. This could be even lower if current pricing trends prevail.
Questions & Answers
Q.What is the projected compound annual growth rate for global operator capital expenditure from 2017 to 2020?
What is the projected compound annual growth rate for global operator capital expenditure from 2017 to 2020?
Dell’Oro predicts a 1% compound annual growth rate for global operator capital expenditure in constant currency terms. This forecast covers the period between 2017 and 2020, showing an improvement on previous projections.
Q.Which specific markets are contributing to the more optimistic forecast for global operator capital expenditure?
Which specific markets are contributing to the more optimistic forecast for global operator capital expenditure?
The improved projection for global operator capital expenditure is largely attributed to signs of improvement in the US and Chinese markets. This positive development was highlighted by Dell’Oro’s carrier economics lead, Stefan Pongratz.
Q.Why is operator revenue growth a concern, despite the anticipated return to capex growth?
Why is operator revenue growth a concern, despite the anticipated return to capex growth?
Constrained operator revenue growth is expected to hinder further capital expenditure acceleration, even with 5G's introduction. Currency-adjusted operator revenues are projected to remain flat as new revenue streams struggle to offset slower smartphone growth.
Q.How much of total mobile revenues is the IoT expected to account for by 2020?
How much of total mobile revenues is the IoT expected to account for by 2020?
Dell’Oro estimates that carrier IoT revenues will only account for 2% of total mobile revenues by 2020. This proportion could be even lower if current pricing trends continue over the next few years.
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