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LTE to LTE-A What You Need to Know Right Now (whitepaper)

13 Jan

LTE is rapidly evolving to LTE-Advanced – this White Paper describes the main drivers behind this, and the benefits that it promises both to operators in terms of reduced OPEX/CAPEX and spectrum utilization and to subscribers in improved data speed and capacity.

Dowload white paper:

Source: Aeroflex.




2013 LTE Capex and Opex predictions. By 2017, U.S. carriers expected to spend over $90 billion in capex and opex

12 Aug

According to a recent LTE capex and opex forecast published by iGR, Tier One operators (AT&T, Verizon Wireless, Sprint, and T-Mobile USA) and Regional and Small Operators (RSOs) are projected to spend  by 2017 $37 billion in LTE capex and $56 billion in opex.

“US capex spending is forecasted to be 10% of global capex spending and will peak in 2013″ said Iain Gillott, President of IGR. “The radio equipment, which includes base station equipment, tower modifications, installation and construction, represents 70% of the $37 billion capex budget, with backhaul and evolved packet core expenditures representing the balance.”

“By 2017, US opex spending by US carriers is projected to be $56 billion,” said Gillott. “and represents expenditures required to keep the network running every month. Specific elements include radio maintenance coupled with ongoing cost of backhaul and transport.”

Key takeaways from the interview include:

  • In 2013, Tier One expenditures will be $10 billion compared to only $750 million by the RSOs.
  • Of the total U.S. LTE infrastructure capital expenditures forecast of $37.5 billion, RSOs are expected to spend only $3.2 billion.
  • Operating expenditures by RSOs are expected to be $2.1 billion, a small percentage of the expected $56.5 billion opex expenditure forecast.
  • iGR’s LTE cost model is based on the amount of data the network is able to support and deliver. The Capex cost model is based on the cost required to add 1 GB of data capacity to the network, while the opex cost model is based on the cost per user per month.
  • Equipment vendors selling to RSOs will need to adjust their sales and product strategy because RSOs will deploy more hosted solutions to include shared packet core and policy engines.


Achieving retail operation excellence through unified communications

9 Jan

Huawei Enterprise Retail Solution Blog

Retail eCommerce and mobile channels are not restricted by space limitations of physical store front and thus can make the full inventory of merchandise available for shoppers to view and compare, and shoppers can easily find third party or peer reviews that they trust. On the other hand, traditional retail stores bring that personal touch and more upselling opportunities. Huawei’s retail video solutions boost retailers’ omni-channel strategy and operation efficiency by increasing the level of product expertise among sales representatives, promoting tight and real-time collaborations across the full supply chain, and bridging the gap between stores and other retail channels by enhancing physical experience with virtual content.

Huawei Digital Signage Solution

Huawei’s digital signage solution is a centralized management system to control audio, video or graphic content displayed on devices located in physical retail stores. It consists of media creation, media distribution, media management and media display functionalities, and can…

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Telecom companies at risk of becoming mere utilities

12 Dec

Network World – For telecommunications companies everywhere, the future has “catch-22” written all over it. Network operators face disintermediation of their customer relationships and commoditization of voice and data services, while at the same time they are called upon to invest significantly in deploying new network technologies to meet exploding bandwidth demands and QoS requirements. Simultaneously, network operators face changing market dynamics and a host of new competitors.

Wireless devices are set to outnumber the world’s population by the end of 2012, according to data from Cisco Systems. IDC predicts broadband bandwidth demand to increase tenfold by 2015. Couple these statistics with the proliferation of independent access points and the disintermediation of the billing relationship by “app stores,” and one could easily argue that network operators are on the road to mere utility status. Complicating everything is the fact that in many cases, the trajectory of current revenue models does not support future capex requirements. [Also see: “Cisco: Networked devices will outnumber people 3 to 1 in 2016“; “Exponential bandwidth growth and cost declines“]

With technology evolving in every direction and business models under threat, network operators are obviously at a critical juncture: They need to “pivot” by imagining a prosperous future for their business and developing a path to realize that vision. They also need to realize that they can’t do it alone.

ANALYSIS: ‘World’s largest’ telecom deal turns out to be a dud

Much of the disruption at work in the global market is the byproduct of innovation driven and/or enabled by startup companies, which imagine a future unencumbered by history. These nimble innovators are the source of much of the change that is rewriting the rules in the marketplace, but they can also be the source and inspiration for the reinvention that network operators need.

Network operators need to expand network capacity in the face of traffic commoditization and margin compression. Yet they also must carefully balance capex investment and traffic revenues; this has invigorated investment in dynamic network management technologies, including virtualization, and innovative infrastructure architectures, such as small cell. Startup companies based in Silicon Valley and other innovation centers around the world are driving many of these advances.

While these new technologies hold promise to rationalize the provisioning of basic network capacity, the more significant challenge for these network operators is to identify, develop and deploy new “value-added” services that leverage their network infrastructures, customer relationships and billing/servicing capabilities.

Virtualization provides an opening for telecom companies to leverage their inherent infrastructure advantages into new business opportunities, but the history of innovation by these same network operators has been less than impressive. At the same time, startup companies are the most efficient innovators on the planet. As such, there is a clear and compelling case for collaboration between established incumbents and disruptive innovators.

Unfortunately, most corporations fail in the implementation of their collaborative programs. There is, in effect, an impedance mismatch between the world of the established corporate leader and the disruptive startup. These are two different worlds, with different rules and requirements, tolerances for risk and reward, resources and definitions of “fast.”

Overcoming these challenges isn’t easy. It requires network operators to develop new skill sets in quickly bringing innovative products and services to the marketplace — in partnership with disruptive innovators. Success depends upon consistently identifying these startups and leveraging them through the telecom’s market reach, and a business architecture that provides an “open platform” that facilitates the rapid testing, deployment, validation and scaling of new services.

With an open platform, network operators position themselves to rapidly evolve their product and service offerings in response to market opportunity and/or demand. But the opportunity flows both ways. Leveraging their networks and corporate resources to address distribution, QoS, marketing reach, billing and customer support, network operators have the opportunity to position themselves as the infrastructure and go-to-market partner for young, innovative companies.

This positioning not only builds on the inherent strengths of a telecom but offers disruptive startups essential resources that would otherwise be costly (in terms of time and investment) to develop without necessarily increasing their enterprise value. The spectrum of managed services innovations should provide particularly attractive collaboration opportunities between network operators and startup innovators. Small business and consumer offerings are interesting initial entry points for this kind of collaboration.

Embracing an “open platform” for delivering next-generation information services to customers will depend upon the ability of network operators to engage, on a sustainable basis, with startup companies based in places like Silicon Valley. The onus for outreach to these communities will lay primarily with the network operator. This too will require the development of new business skills and “DNA” by telecoms. Innovation models based upon corporate venturing provide some guidance as to how to develop and successfully maintain these outreach efforts. The path isn’t easy, but it’s critical that telecommunications companies embark on this journey.


Where and how to Invest in Telecom Growth

5 Nov

Investors who have had their hard earned money invested in telecom have had a rough few years.  What once was a lucrative growth story has turned into a high-risk adventure that for some reason still has people calling the remaining skeletons value plays.  Alcatel-Lucent?….No thanks.  Ericsson?…..Ugh.  Nokia Siemens?….I don’t think so.   Motorola?….right.  Nortel, Marconi?….don’t exist anymore.  Cisco?….what have you done for me lately?

A boatload of factors has contributed to the demise of these former high flyers.   Lack of focus by management trying to be everything to everyone everywhere, macro-economic issues causing drastic reduction of Communications Service Providers (CSPs) CAPEX budgets, fierce competition by the entry of Huawei and ZTE driving prices and margins down, using what many suspect are unfair practices and government support.  Valid reasons, but not the complete story.  There is an often overlooked issue that I think should be the biggest concern:

Although they will never publicly admit to it, the CSPs simply do not consider the networks as a differentiator anymore.  And it so happens that despite all the other solutions and services that Alcatel-Lucent, Ercisson, Nokia Siemens, and even Huawei and ZTE have to offer, networks remain their core business.  Unfortunately for them, CSPs’ networks are now considered by their owners to be commoditized pipes that do not contain the intelligence that is required to create a competitive advantage.   That is the real reason why margins are so compressed.  CSPs are just not prepared to pay the premiums they once did.

The problem is that the above-mentioned corporations are, despite all the reorganizations, still built as if their network equipment solutions sell at premium pricing.  They don’t anymore.  In reality, network infrastructure solutions have become a commodity business.  I am staying away until I see them really re-invent themselves, and that is going to take years.

So what else is there if you are a growth investor and look for telecom opportunities?  You can have a look at some of the smaller vendors such as Infinera.  Lots of promise for a long time, but will they ever deliver against that promise?  Maybe worth a small bet?….maybe.

ATT, Verizon?  You have to look elsewhere for growth, unless they decide to seriously expand internationally, which would be out of character and unlikely to be in their best interest.

If you want to find growth in telecom, you have to look at Latin America and China.  I prefer Latin America as there is less of an issue with government involvement and quite frankly, Latin American telecom is doing much better,  A good indicator is troubled Alcatel-Lucent Q3 earnings report in which they highlighted the one bright spot: double-digit revenue growth in the Caribbean and Latin America.  Why is that?

Most countries in Latin America only have about 30% high-speed internet penetration rate mostly limited to urban areas.  This penetration rate is not due to lack of demand, but rather due to incumbent operators, so far, not seeing the business case in expanding their networks to the non-urban population

Something is changing though.  Improvements and expansions in high-speed internet infrastructure are directly related to economic progress.  Governments realize that these investments are necessary to continue to advance their development.  As a result, across the region they are now heavily promoting and investing in national broadband and fiber network deployments so that their people can access the internet.

Due to this lack of investment, in many Latin American countries, the telecom sector is heavily fragmented.  It is very common to see incumbent operators focusing on the densely populated urban areas and neglecting the rest of the country.  You will find within, but especially outside of, the big cities, tens or hundreds of small local cable operators. For example, Ecuador has over 200 and Paraguay more than a 100 cable TV operators.  But what these local operators offer are video services, not high speed internet.  So these cable TV operators have thousands of customers, existing revenue, they truly understand their local markets and they know they can sell broadband services into the majority of their customer base, if they have the budget.   This is similar to the environment that existed 20 years ago right here in the USA.

Here in the USA, twenty or so years ago, ComCast built a powerhouse by consolidating regional players under one umbrella.  I think that is exactly what will happen over the next decade in many of the Latin American countries.

Two companies seem to be well positioned for this wave of consolidation:

1.  America Movil (NYSE: AMX)

This is the Mexican telecom top dog in Latin America.  Owned by the world’s richest man – Carlos Slim, who also sits on the United Nations broadband commission that is pushing the agenda of enabling 60% of the population of all third world countries access to high speed internet at pricing less than 5% of GDP per capita.  AMX Operates in 18 markets across Latin America and the Caribbean where in most cases they have the #1 or the #2 market share. They are expanding their reach worldwide by acquiring larger positions in European operators such as KPN (The Netherlands) and Telekom Austria.

More importantly, with the increased push by countries to execute on their national broadband plans combined with the existing fragmentation in many of the markets AMX operates in, they are ideally positioned to lead the next inevitable wave of consolidation.  AMX has the financial power to instigate the consolidation.  And if governments are prepared to subsidize some of the investment to realize their national broadband plans AMX can create a profitable business case.  Combined with an accelerated growth of the region’s middle class who will have more money to spend on both basic and more sophisticated telecom services, AMX is poised for growth over the next 10 years.

2. Liberty Global (Nasdaq: LBTY)

Another company that may even be more likely to jump in the middle of the Latin American consolidation wave is Liberty Global, one of the leading international cable operators in the world with their headquarters in Colorado.  I really like LBTY.  They are opportunistic, patient, and decisive.  Always looking for expansions.  11 of their 13 operations are in Europe, with the remaining two in Puerto Rico and Chile.   They expanded in Europe by taking advantage of their own industry consolidation wave.  LBTY has been there before.  They know how to do this, which is an advantage they have over AMX, as AMX’s background is a legacy of being the incumbent, not the challenger.

With the ongoing crisis in Europe, I think their investment dollars will for the majority be redirected from Europe to Latin America.  They have had a few years of familiarizing themselves with doing business in the region, a necessary step that is often overlooked by many North American and European companies aiming to do business in Latin America.   The acquisition of VTR, the leading operator in Chile, in my opinion will prove to be a great launching pad to expand their presence in the region.  I cannot see them buying into just two operations in a high growth region without the intention to replicate their successful European business model.

Source: By Hans el Fasid – November 4, 2012 | Hans is a member of The Motley Fool Blog Network — entries represent the personal opinions of our bloggers and are not formally edited. I do not own shares in any of the companies mentioned in this entry.

Mobile Network Capital Expenditure Falls Significantly in Europe Despite 4G

26 Sep

SINGAPORE — ABI Research — Mobile capital expenditure in Western Europe contracted 3.8% quarter-on-quarter (QoQ) even though mobile operators are building out coverage for 4G, and to a lesser extent enhancing capacity and coverage of their 3G networks. Not only was QoQ spend down but also, year-on-year (YoY) growth was down significantly (19%). “Overall capital expenditure for the region is expected to drop 12% to $14.4 billion for the year. Western European carriers are at different stages in development which will very likely impact 4G adoption patterns,” said Jake Saunders, VP for Forecasting at ABI Research:

“Overall capital expenditure for the region is expected to drop 12% to $14.4 billion for the year. Western European carriers are at different stages in development which will very likely impact 4G adoption patterns”

  • T-Mobile’s capital expenditure in the first half of 2012 was 4.9% lower than the previous year, although it is prioritizing LTE roll-out. The operator’s capital expenditure in the Europe region as a whole was €792 million; a YoY decline of 8.8%. The operator cited the difficult economic climate and tightened access to funds.
  • Vodafone also trimmed its capital expenditure. Spending was down £0.1 billion YoY but the investment continued to make improvements to coverage and quality of service.
  • For France Telecom, investment in networks, which represented 55% of the group’s capital expenditure in the first half of 2012, rose 6%. In France, there was an acceleration of investment in very high-speed mobile 4G and an increased investment in mobile capability. In Spain, an increase of €40 million YoY was linked to the acceleration of the mobile access network renewal program.
  • For Telefonica, capital investment was a mixed bag in Europe. In Spain, capex for the 1H-2012 year was €787 million, down -12.7% YoY. The operator claims that because it has achieved substantial “quality indicators improvements,” it meant the operator could reduce capex. In UK, capex reached €375 million by June 2012 with a YoY increase of 9.5%. Telefonica UK improved coverage and capacity of its mobile network, and refarmed 900 MHz spectrum in urban areas. In Germany, the boost in capital expenditure of €271 million in 1H-2012 was driven by an expansion in LTE network deployment.

ABI Research’s study, “Mobile Capital Expenditure Forecast: Western Europe,” focuses on the Western European region and includes base station and core network data.

Source:  September 25, 2012 11:09 AM Eastern Daylight Time

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