Comms capital spending is probably going to be flat, say analysts IHS Markit, which predicts that the 2011‒2015 telecom investment cycle driven by Long Term Evolution (LTE) is over. 2016 marks the start of a new trajectory of decoupled and desynchronized investments that will result in long-term flatness in the telecom sector say Stéphane Téral, senior research director and advisor, mobile infrastructure and carrier economics, IHS Markit, and Michael Howard, senior research director and advisor, carrier networks.
Overall global economic health is improving, growing in the low single digits in 2016 while this point is the beginning of desynchronized investments between regions that will result in global flatness through 2017 and a pickup in 2019, potentially driven by “related” 5G spending—although there are "clear indications" from frontrunners KT, NTT DOCOMO and SK telecom that they don’t expect a major capex hike. Rather, fibre-based fixed broadband and backbone networks will be the major areas of spending.
“As a result, we expect global telecom capex to increase at a five-year (2016‒2020) compound annual growth rate (CAGR) of 0.8 percent, reaching US$353 billion in 2020. This forecast is based on the assumption that an economic recession or other major event will not derail our model over the next four years.”
Europe’s five largest service providers, known as the “Big 5” (Vodafone, Deutsche Telekom, Orange, Telefónica and Telecom Italia), have finally turned the corner, switching from five consecutive years of unabated revenue decline to moderate growth in 2016, signifying some much-needed stabilization, say the researchers.