Mobile operator CAPEX to grow 5 percent in 2011 despite US debt and global inflation

SINGAPORE: Mobile operator capital expenditure is expected to grow 5 percent in 2011, to reach $119 billion. Radio Access Network equipment is still driving a respectable percentage of operators’ CAPEX. Fifty-six percent of global operator CAPEX came from base station deployments, upgrades and swap-outs.

ABI Research vice president of forecasting Jake Saunders observes: “Many operators are leaning towards small cell deployments (microcells, picocells and femtocells) to fill dead zones and boost coverage inside buildings. However operators are also still investing in improving the downlink and uplink performance of their networks, not just on LTE but also HSPA+. CDMA2000 networks are similarly continuing to upgrade.”

“A case in point,” Saunders continues, “is India's Sistema Shyam TeleServices. Recently ZTE secured their upgrade contract to roll out EV-DO Rev.B Phase2 in Rajasthan. Data throughput is expected to rise to 14.7 Mbps (with a three-frequency carriers bundle), which underscores that high performance data rates are not just the preserve of developed market operators.”

Core network spending also continues to increase. In 2011, core network expenditure is likely to approach $12 billion. Spending on core network equipment is expanding on a number of fronts. Operators are not only investing in LTE Evolved Packet Core upgrades but also soft-switches that enable voice and media gateways to handle media-rich mobile data more efficiently.

“There is still a considerable amount of 3G GGSN and SGSN investment going on,” adds practice director Aditya Kaul, “as a number of countries are still very much building out their 3G coverage and services. Over time, we anticipate greater investment in 4G-capable gateway architecture.”

There is still continuing economic uncertainty in a number of European countries as well as in the US regarding its $14 trillion debt cap, but operators can still see a clear need for capital investment.