Despite Tumbling Economy, Service Providers Still on Solid Ground

According to a new report from Infonetics Research, worldwide service providers are on track to spend $275 billion on capital expenditures in 2008. This is up 10.5% from 2007 and can be accredited to currency appreciation against the U.S. dollar.

The report titled, “Service Provider Capex, Opex, ARPU, and Subscribers,” was updated to reflect world events and suggests that because of recent news, 2009 can expect to see a capex decrease of approximately 2% among service providers worldwide.

These changes are different from what Infonetics originally projected in 2006. They forecasted the spending plateau to occur in 2009, but the current global turmoil has sped up the process, making it occur a year earlier in 2008.

While many industries are being especially hard hit during this economic downfall, most service providers are taking it easy because they have clean balance sheets and are entering the global crisis on solid financial ground. This financial stability can be attributed to the fact that a lot of these companies went through their correction when the Internet/telecom bubble burst, resulting in deep double-digit capex cuts.

Other highlights from the report include the following:

Wireless services will help keep service providers' revenue afloat and prevent telecom from a major slump. Worldwide service provider revenue is on track to reach $1.63 trillion in 2008, up 9.5% from 2007, due in large part to currency appreciation, with the rest coming from wireless. The world's 10 largest service providers (ranked by 2007 revenue) are AT&T, Verizon, NTT, Deutsche Telekom, France Télécom, Vodafone, Telefónica, China Mobile, BT, and Sprint.

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