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Growth remains weak for most telcos: Ovum

Growth remains weak for most telcos: Ovum

CSP capex to remain flat as it exceeds $US2.1tn from 2014 to 2019

Ovum forecasts global communications service providers’ (CSPs’) capital expenditure (capex) to remain flat through 2014 to 2019 as it exceeds $US2.1 trillion, and claims carriers must continue to do more with less.

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This includes trialling new technologies, network designs, vendors, and operating models.

Despite its Service Provider Revenue and Capex Forecast report predicting 2019 capex alone to hit $US367 billion, the analyst firm claims vendors will be forced to negotiate pressured spending on the back of modest revenue outlooks as growth remains weak for carriers.

Traditional telco vendors will also face new opposition from a different set of vendors chasing CSPs’ network budget dollars as a result of SDN- and NFV-influenced software- and IT-centric opportunities.

“Value and profits are shifting among industry segments,” Ovum principal network infrastructure analyst, Matt Walker, said. “These are two things to remember in all of this. First, most of this change is great for the consumer. Users are capturing enormous benefits from the technology investments and new business models of CSPs and adjacent market players.”

“Second, there are upsides to this industry change for vendors. Despite flattish CSP capex, there is a new sector of companies building network infrastructure, particularly offsetting the CSP weakness.”

According to Ovum, digital media companies are spending heavily on CSP-grade network infrastructure which could increase capex by $US50bn or more in 2019; but to capitalise on this growth, vendors must strengthen both their telecom and hardware as well as IT and software plays.

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