Telecom network spending seen rising this year amid 4G boom

Mon Jan 26, 2015 2:18pm EST
 
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By Leila Abboud and Olof Swahnberg

PARIS/STOCKHOLM (Reuters) - Europe's telecoms equipment makers look set for an unpredictable year because of consolidation among their operator customers and a slowdown of buildouts of faster mobile networks, known as 4G, in the United States and China.

Nevertheless, overall spending on mobile and fixed networks is expected to grow for a second consecutive year, as operators worldwide seek to improve coverage and add capacity to keep up with rising data traffic from video and smartphones.

While construction of 4G networks is largely complete in the United States, Japan and Korea, the technology is just arriving in much of eastern Europe, Latin America and Africa.

Market research firm Gartner predicts operators' spending on mobile infrastructure, including traditional radio base stations and newer gear like small cells, will increase 8 percent this year to hit $43.36 billion.

Investment in fixed networks is set to rise 7.7 percent to $10.33 billion, driven by fiber broadband rollouts, it said.

"The 4G story is spreading after the first spurt of rollouts in the U.S., Japan and Korea is behind us," Deborah Kish, an analyst at Garner, said. "Telcos in more far-flung places from Honduras to Croatia are looking to introduce more advanced services and move prepaid customers on to contracts."

Analysts at brokerage Bernstein Research meanwhile predict wireless equipment spending will rise 5 percent, though fixed network equipment will be largely flat.

In a rare development, Europe looks set to be a growth driver for telecom gear companies this year, with leader in mobile gear Ericsson, as well as number two China's Huawei and number three Nokia set to benefit from any uptick in spending.   Continued...

 
A commuter uses his mobile phone in New York, December 12, 2013. REUTERS/Eric Thayer