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VIRTUALISATION Mixed results for telco industry in recession
VIRTUALISATION Mixed results for telco industry in recession | Mixed results for telco industry in recession |
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| by Peter Dinham | |
| Sunday, 10 May 2009 | |
  
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However, fixed operations of the telcos declined 3.2 percent in the first quarter this year compared to the first quarter of 2008. This compared to pre-recession quarterly growth for fixed operations in 2007 of -1.8 percent to plus 0.5 percent. Ovum says that both mobile and fixed service provider revenues are down a few percentage points compared to pre-recession rates, but, given the double-digit declines seen in many other industries, the research firm says “we take this as good news.” “These results are also generally in line with our forecasts, which assume that telecoms services are somewhat recession resistant and the impact felt will be relatively mild compared to other industries.” Ovum says its results are based on a survey of the first quarter this year of 10 telecoms operators, seven equipment vendors, six component makers, and two contract manufacturers. The operators are all based in North America, whereas the revenues of the other companies represent global operations. The company also says that North American results are heavily skewed by Sprint, whose revenues fell 12%, and with Sprint’s results removed, mobile revenues grew 8.7%, which is closer to the company’s expectation for other regions and the global average growth in 1Q09. According to Ovum, while service providers’ revenues fell only a few percentage points in 1Q09, the results show operators are making widespread and deep cuts in capital spending, adding that among fixed operators surveyed, capex fell 16% and among mobile operators it fell 27% (the latter heavily skewed by Sprint). Ovum says that even companies with above average revenue growth made cuts, with Verizon Wireless growing revenues nine percent and cutting capex by 7.4%, and Time Warner Cable growing revenues nearly 5% and cutting capex by nine percent. The capex reductions have clearly hurt suppliers, according to Ovum, which says that among equipment vendors, revenues declined 15% on average, with Alcatel-Lucent down 6.9%, NSN down 12.1%, and Cisco down 21.5% (with exchange rate effects factored out for Alcatel-Lucent and NSN). Not surprisingly, says Ovum, operating margins were down across the board, with some, including Alcatel-Lucent and NSN, reporting losses. |
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