European Telecom Carrier Capex Rises in 2005

European incumbent, competitive, and wireless service provider capital expenditures increased 6% to US$52.7 billion between 2003 and 2004, and are expected to climb another 9% to US$57.5 billion in 2005, according to Infonetics Research's biannual Service Provider Capex Analysis, Europe report.

Total European service provider revenue was also up in 2004, increasing 2% from 2003 to US$397 billion, and is expected to inch up another 3% in 2005. Much of the growth is in mobile carrier revenue, which grew 12% in 2003 and 8% in 2004, and is expected to increase further in 2005. Meanwhile, incumbent carrier revenue has been holding steady since 2001, and is projected to increase 3% in 2005.

European service providers are now spending 13% of their revenue on capex, a healthy, sustainable capex-to-revenue ratio that will continue throughout 2005.

Infonetics' projection for 2004 from one year ago was within 1% of actual 2004 capex and revenue.

"After seeing severe cuts in capex by European service providers in 2002 and 2003-as much as 80% by some-capex increased in 2004 as expected, and will increase again next year as incumbent, competitive, and wireless carriers focus investments on access aggregation equipment, IP/MPLS routers, and voice equipment," said Kevin Mitchell, directing analyst for Infonetics Research. "Incumbents represent over 80% of total European capex, and in aggregate have plans for double-digit capex increases in 2005."

2004 European Capex Highlights

• DSL subscribers increased 85% between 4Q03 and 4Q04 to 33.6 million
• Mobile subscribers increased 15% to 373 million
• Access lines increased 3% to just under 260 million
• Western European carriers, who own many other carriers in other regions, made up 61% of all European carrier revenue and 58% of capex in 2004

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Posted to the site on 28th April 2005