Telecom service provider revenues, capex both grow robustly in 2Q11

MELBOURNE, AUSTRALIA: The telecoms industry put in a reassuring performance in the second quarter of this year, with service provider revenues and capex growing robustly compared to the same period in 2010, according to Ovum.

In a new report, the independent telecoms analyst found that global revenues climbed 11 per cent in 2Q11, and capex increased by 17 per cent on a year-over-year (YoY) basis. Meanwhile, annualised revenues globally reached $1.86 trillion for the four quarters that ended Q2, up 5 per cent on last year’s figure.

“The revenue growth is a promising sign that the telecom recovery is on track”, noted report author and Ovum principal analyst Matt Walker.

Walker also commented: “These results should also please vendors, as the recovery in capex was strong in most regions. Some of the growth is due to a weak baseline in 2010, and some also due to exchange rate fluctuations, but we also see signs that carriers are gaining confidence to go ahead with network initiatives that had been delayed by the financial crisis.”

Regarding currency swings, Walker noted that between the second quarter of 2010 and the second quarter of 2011, the US dollar depreciated 17 per cent versus the Australian dollar, and 11 percent versus the Yen. These swings should not be ignored, said Walker, but he emphasized that even the North American market – where exchange rate fluctuations are not an issue, and the macroeconomy has been under pressure in throughout 2011 – carrier revenues grew four per cent YoY in 2Q11, slightly faster than the 1Q11 growth rate.

According to the report, YoY capex growth was positive in all key regions, with only China and North America posting growth rates under 10 per cent.

Walker commented: “The picture is not completely rosy and there were some disappointments. These included North American capex growth slowing compared to the first quarter and political turmoil in the Middle East affecting capex growth in this region. However, overall, the picture is not nearly as bad as stock market jitters might imply.”