Figure 1 shows year-on-year growth trends for both carrier capex and the carrier equipment market. The analyst firm concludes that if the capex data is used correctly, understanding carriers’ spending plans could be helpful in projecting the directional trends relative to the previous year of the equipment market. However, it is most certainly not recommended to rely solely on capex data for projecting the magnitude of the growth or decline in the equipment market, simply because the carrier equipment portion constitutes less than 30% of total capex spending.
In the first half of 2014, robust growth in mobile investments led to strong capex growth for the combined mobile and fixed-line markets. Dell’Oro Group estimates worldwide capex advanced at a single-digit rate in the first half of 2014, driven by double-digit growth in mobile investments (Figure 2). This advance was fuelled by the ongoing transformation from voice centric to data centric applications and the intensifying competitive landscape. It estimates mobile investments declined year-on-year in the first half of 2014, although the rate of decline subsided somewhat from first half 2013 levels. The capex trends in the first half of 2014 aligned strongly with equipment trends, driven by strong growth in range of solutions.
Even though carriers are struggling to identify new revenue streams, Dell’Oro Group estimates worldwide carrier revenues advanced in the first half of 2014 at a low single-digit rate, driven primarily by steady mobile revenue growth in the North America and Asia-Pacific regions (Figure 3). Revenue contribution from traditional smartphone and tablet related services continued to dominate the product mix in the first half of 2014, driven by strong growth in mobile broadband (MBB) devices. Revenues from new income streams, including M2M and Internet of Things (IoT), remained negligible in the first half, though many of the carriers and vendors are optimistic about the existence of opportunities ahead with the connected car, connected home and mobile TV, among other things.
