Worldwide telecoms spend will pass trillion dollar mark

10 Feb 2004

Technology analyst IDC has predicted that worldwide telecoms services spending will surpass US$1 trillion for the first time in 2004, helping the industry to re-establish its momentum that it lost in the past few years.

According to IDC’s Worldwide Telecoms Black Book, worldwide telecoms spending in 2004 will be 4.4pc greater than in 2003 and will enjoy a compound annual growth rate of 4.7pc from 2003 to 2007.

“Data offerings will play an important role in driving overall telecom growth, particularly IP-based services such as broadband Internet access and IP VPNs,” said Rena Bhattacharyya, program manager, worldwide telecom Markets at IDC. “Nevertheless, the voice market will continue to be a key part of the industry, and will generate more than two-thirds of the industry’s revenue throughout the forecast period.”

In 2004 alone, data services revenue will grow 16pc over the previous year, and will account for one quarter of the total market. Demand for data services will be strong in all regions, producing a 15pc CAGR (compound annual growth rate) for total data services worldwide and a 30pc CAGR for wireless data services. By 2007, IDC believes worldwide spending on data services will reach US$375bn, led by North America and Asia/Pacific, while wireless data services will grow to more than US$150bn.

Worldwide spending on telecom equipment in 2004 will grow 6pc over the previous year to more than US$52bn. IDC expects equipment spending to gradually accelerate throughout the forecast period, achieving an 8.9pc CAGR on demand from all regions. North America will account for half of the market, while Asia/Pacific and Western Europe will each contribute one fifth of total spending.

“While a return to positive growth in telecom equipment spending is in line with expectations, the market will continue to be a challenging place,” said David Emberley, telecom and internet analyst at IDC. “Despite these challenges, equipment providers can still capitalize on a variety of market opportunities by focusing on solutions that support revenue growth, either through greater operational efficiencies or new value-added services.”

By John Kennedy