Worldwide service provider capex is set to grow about 3 percent in 2014, but new research from the Dell'Oro Group reveals that a number of issues will drive a $6 billion decline in 2015.
In the first half of 2014, the research firm said that it estimates that worldwide capex grew at a single digit rate, while double-digit growth in mobile network infrastructure significantly outpaced the low single-digit growth in service revenues.
During the second half of 2014 and 2015, fiber and 4G LTE coverage buildouts will continue to drive telecom equipment investments. However, the proportion of capex that will be allocated to new technology enablers and network topologies, including NFV and small cells, is expected to be negligible over the next six quarters.
"While we maintain our view that worldwide capex will grow around 3% in 2014, we believe multiple factors will contribute to a decline in capex during 2015," said Stefan Pongratz, Dell'Oro Group's Carrier Economics analyst. "Higher device penetration, decelerating mobile data growth rates, lack of new revenue streams, and increased competition in both the developing and developed markets have caused worldwide revenue growth to decelerate in the last couple of years."
Pongratz added that slower growth in service revenues coupled with the rapid network progress during 2014 in China, North America, Japan and Europe will also put some pressure on worldwide capex upside in 2015.
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