Growth slows, but telcos' cut costs to maintain financial health

Peter Dinham
Monday, 18 May 2009 14:31

IT Industry - Strategy

“This has impacted net profitability so has attracted headlines,” says Walker, adding that “the focus on the sensational one-time accounting issues (e.g. asset write-offs) has overlooked the industry fundamentals, even if many of these adjustments were necessary, sometimes overdue”.

Looking ahead, as 1Q09 telco earnings reports have trickled out, Walker believes that the results have been largely consistent with Ovum’s analysis of 4Q08.

“Carriers are cutting costs fairly aggressively, with a focus on discretionary capex items with immediate effect on cash flow,” Walker notes, and suggests that overall most carriers are relatively healthy despite the harsh macro conditions.

“The vendor market may be more challenged by this downturn”, added Walker, “as Huawei, ZTE and a handful of other Chinese vendors build on their already strong positions in global markets with a range of tools, such as ability to facilitate or directly offer financing for their customers”.