Telecoms service market grew 4% to US$1.85 trln in 2010, boost from BRIC

Tuesday, 31 May 2011 00:00 - - {{hitsCtrl.values.hits}}

KUALA LUMPUR: Telecoms service providers reported US$1.85 trillion in revenue in 2010, up 4%, underpinned driven by strong growth in the mobile market in the BRIC (Brazil, Russia, India and China) economies.

Ovum said on Tuesday, May 10 the 4% growth was a notable improvement from 2009, when revenues fell by 4%. Average profitability showed positive signs, based on operating cash flow and net profit margins, earnings before interest, taxes depreciation and amortisation (EBITDA) and net debt.

Ovum principal analyst and author of the report, Matt Walke said: “It’s too early to break out the champagne just yet, but within the context of a slowly improving global economy, the telecoms sector is returning to sustainable growth.”

For vendors, although service provider capex fell by 3% in 2010, this was an improvement from the 9% capex decline in 2009. In the fourth quarter of 2010, carrier capex rose 2% when compared to the fourth quarter of 2009.

This modest year-on-year service provider capex increase was the first such growth since the fourth quarter of 2008 during the financial crisis, reflecting that recovery in the telecoms sector was on track.

The Asia-Pacific region excluding China & India had the second best regional capex growth in 2010, versus 2009, up 4.4%; India’s 39% drop was the poorest result. Ovum was optimistic on India’s pick up in 2011–12. China, on the other hand, fell by 19%, dropping capital intensity down to 26.6%, the lowest since 2006.

Most of the big vendors enjoyed healthy top-line on-year growth for 4Q2010. The best performing of the larger vendors included ZTE and Juniper, with 40% and 26% on-year revenue growth respectively.

Alcatel-Lucent and Ericsson recorded on-year growth of 13% and 11% respectively. Nokia Siemens Networks’ (NSN) revenues in the 4Q2010 grew by 0.5% to hit US$5.4 billion, which was it first positive on-year revenue growth since 3Q2008.