China and EMEA Pouring Capital into Mobile Network Expansion

The Asia Pacific and EMEA regions invested more capital in telecom services than any other regions of the world for the second consecutive year, according to Infonetics Research. Most of the growth was driven by the desire to launch LTE (News - Alert), to modernize mobile networks and to carry out national broadband initiatives.

“Operators have to invest in their networks or they'll disappear,” said Stefanie Teral of Infonetics (News - Alert) Research, which has just submitted its Service Provider Capex, Revenue and Capex-by-Equipment-Type report. “Competition is too cut-throat not to.”

NTT, DoCoMo and Softbank (News - Alert) Mobile will make big investments in Japan, while LGU+ and SK Telecom will pour money into South Korea. The Chinese government also recently announced a $58 million stimulus package for investment in the country’s telecom infrastructure.

In Europe, the Big 5 countries have increased telecom infrastructure spending by 2 percent, which is particularly remarkable considering the economic downturn that the continent is currently experiencing. Operators in the Asia Pacific and in the EMEA region each generate about one-third of global mobile revenue.

Global telecom carrier capex grew 3 percent to $301 billion between 2010 and 2011. During 2011, service provider revenue grew 6 percent to $18 trillion worldwide. According to Infonetics, worldwide capex will max out in 2012 and then level off by 2015 or 2016 at about $345 billion annually.

Spending on every type of network grew with the exception of spending for the TDM network. TDM voice has been steeply declining as more customers ditch their landlines for mobile phones.

While much is made of the capital investments in the Asia Pacific and EMEA regions, Latin America also saw a significant increase in telecom infrastructure investments. America Movil and Telefonica (News - Alert) led an increase of 25 percent in capex in Latin America during 2011.

“High demand everywhere for telecom services, particularly mobile broadband, is fueling the latest investment cycle,” Teral noted.“The key capex contributors in 2012 will be Clearwire, Sprint, and T-Mobile USA in the U.S.”

Last year, ABI Research (News - Alert) predicted that the Asia Pacific market would grow at a rate of more than 10 percent for the next two years. Handset shipments in the region increased 56 percent during 2011.