China Defies Global Decline in Wireless Carrier Spending
Published on: 14th Apr 2009
Note -- this news article is more than a year old.
China in 2009 is expected to defy the downturn in the global wireless infrastructure equipment business, as the nation's 3G network rollout drives world beating double digit growth in carrier capital spending, according to iSuppli.
Spending on wireless infrastructure equipment in China is expected to rise to $6.2 billion in 2009, up 13.2 percent from $5.5 billion in 2008. In contrast, global carrier spending on wireless infrastructure gear in 2009 will decline by 3.5 percent to $39.7 billion, down from $41.1 billion in 2008.
No other nation will generate such robust revenue growth, with the second-fastest rising region being India, at 4.5 percent.
"China's wireless operators in 2009 are set make multi-billion dollar infrastructure capital expenditures to support their roll outs of 3G networks," said Jagdish Rebello Ph.D., director and principal analyst, wireless communications, for iSuppli. "These companies are moving aggressively on their 3G rollouts in order to they try to capture market share in the potentially lucrative domestic market for mobile-data services."
In May 2008, China's government finally announced plans to award three 3G licenses as part of a major restructuring plan. Under this restructuring plan, the government has moved to create three telecom providers - China Mobile, China Netcom (GSM) and China Unicom/Telecom - each with fixed line and mobile assets. This has paved the way for the rise in the nation's infrastructure spending in 2009.
iSuppli expects China Mobile to build on its TD-SCDMA trial in major cities and to continue rolling out a nationwide TD-SCDMA network in 2009. China Unicom and China Telecom will get their official 3G licenses in the first quarter of 2009, and China Unicom will launch its W-CDMA services in the second half of 2009.
China Telecom has already started to secure quotes from equipment suppliers for the build-out of its 3G CDMA2000-1x-EV DO network. iSuppli believes that the carrier will have to invest a significant portion of its capital spending on the networking core in addition to base stations, gateways and switching centers.
The global contraction in wireless infrastructure spending primarily will be driven by carriers in the developed nations, slowing down the pace of their investments in data-centric 3G/3.5G technologies.
"In an uncertain macroeconomic environment and amid reduced customer spending, carriers in the developed nations will be cautious on their capital expenditures as they seek to maintain a positive cash flow in 2009," Rebello said.
"In the emerging markets of India, South Asia, and Africa, carriers will continue to invest in
expanding the coverage of their voice-centric 2G/2.5G networks in the face of strong subscriber growth in these parts of the world. But these carriers are not immune to the global economic downturn, and the pace of investments in networking infrastructure will be slower than originally forecasted."
iSuppli also believes that Indian operators will be cautious in their 3G investments in 2009 as they conserve cash flow following any expenditure on spectrum acquisition. iSuppli expects that the bulk of the India 3G spend will start in 2010.
Global carrier spending on wireless infrastructure equipment will remain essentially flat in 2010, before rebounding with 4 percent growth in 2011.$page_length='long'; ?>