Report finds that mobile operators are better placed to weather the economic storm
A new report from the ITU finds that in general, mobile operators are better placed to weather the economic storm. Mobile operators generally enjoy greater flexibility in terms of capex commitments, as capex commitments represent only 20-30% of their total cost base. Mobile operators have invested heavily in 3G networks, but the cost of incremental upgrades (e.g. to those based on high-speed packet access or HSPA) is comparatively low. Mobile operators can also undertake greater network-sharing to limit costs and boost gains in coverage, for only limited amounts of additional capital. ABI Research notes that growth rates in regional mobile capex may slow, but capex will probably not decline on a global basis.
In contrast, investment in NGN may be less discretionary for fixed-line operators, however, competing with new market entrants, capacity resellers and cable TV, as well as increasingly, mobile broadband. Universal service obligations may also prevent fixed carriers from reducing their capex commitments substantially. Several carriers such as AT&T have reported cuts of capex of between 10-15%, but industry analysts Informa find that operators' investment plans have not been 'severely altered' so far, with many operators acknowledging the importance of investment in ensuring that quality of services is maintained.
Read more in ITU's forthcoming report, "Confronting the Crisis: Its Impact on the ICT Industry", which will be published on Monday 16 February 2009.