RHK Sees Rebound In North American Service Provider Capital Expenditures In 2003
December 4, 2001
South San Francisco, CA. RHK reports North American wireline service provider capital expenditures (Capex) will continue to decline in 2002, but rebound in late 2002 or early 2003, reaching approximately $80 billion by 2005. The firm forecasts that 2001 Capex will end at roughly $66 billion, marking a 28% decline year-over-year from $92 billion in 2000. For 2002, Capex will total approximately $53 billion, a further decrease of 20% from 2001 levels. RHK expects spending to increase in 2003 due to service providers improved operating cash flow, more robust balance sheets, and efforts to meet growing IP traffic demands.
"The 2001-2002 drop in Capex is the after-effect of an unsustainable $50 billion bubble in service provider Capex in 1999-2000," says Robert MacLellan, Director of RHK s Telecom Economics Program. "Liberalization in the North American service provider market, the explosion in access to the Internet and the switch to optical networking by new and incumbent service providers drove spending rates that were unsupportable by service providers operating cash flows and debt capacities. The market simply became flooded with too many service providers offering price-centric transport services." MacLellan adds, "We now believe that the shape of the Capex recovery curve will be determined by the pace and nature of consolidation of the service provider community over the next eighteen months."
The Capex forecast is the first release from RHK s new Telecom Economics Program (TEP), which examines service provider spending history, tendencies, and abilities on a continuous basis. For more information on TEP, contact Mike Mahan in the US at 650-737-9600, George Stojsavljevic in the UK at 44-1462-48-54-55, or Takashi Kimura in Japan at 81-3-492-1341.
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RHK Inc. is the leading industry market research and consulting firm specializing in the analysis of advanced technologies for the global public telecommunications network. The company provides subscription services and consulting to technology vendors, service providers, and the investment community around the world. RHK s areas of expertise include: Telecom Economics; Access Networks; Switching & Routing; Packet Network Services; Optical Components; Telecom Semiconductors; SONET/SDH, WDM & Optical Networks, and Operating Support Systems. For more information, visit the company s Web site at www.rhk.com.
Liza Ford Public Relations 650-737-9600
liza_ford@rhk.com
E-mail: liza_ford@rhk.com
Web site: http://www.rhk.com
