European telcos’ capex falls 15pc

8 Apr 2004

Capital expenditure by European fixed line telecom service providers fell 15pc to €35.7bn during 2003, according to new analysis by Infonetics Research. However, the researchers say that the decline in capital expenditure is stabilising and capital expenditure on telecoms equipment and assets is expected to increase this year.

According to Infonetics, as in other regions of the world European service provider capital expenditure (capex) pending is stabilising and is expected to increase 2pcin 2004. Revenue is also expected to increase 4pc.

European service providers are now spending 12pc of their revenue on capex, which Infonetics says is a healthy, sustainable capex-to-revenue ratio that will continue throughout 2004.

According to the research, European public fixed line service providers spent 23pc of capex, or €8.3bn, on voice equipment.

Infonetics’ research focused on all publicly-owned fixed line service providers (incumbents and other licensed operators) competing in 20 Western and Central European countries, including Ireland.

Across Europe, fixed line operators had 18.4 million DSL (digital subscriber line) customers and 2.3 million cable internet subscribers as of the fourth quarter of 2003. European operators had some 260 million access lines to customers as of the fourth quarter, 2003.

“Both incumbents and competitive providers cut back capex significantly in 2003,” said Kevin Mitchell, directing analyst for Infonetics Research and lead author of the report. “Competitive providers cut the deepest, reducing their capital spending by 38%. However, both segments look to marginally increase their spending this year as their revenue is projected to increase after the last few years of sales declines.”

By John Kennedy