Mobile - Capital expenditure to rise US$131 billions

Mobile capex more than US$131 billion and rising despite turbulent economy

Global capital expenditure on mobile communications continues to rise due to greater emphasis on new data services, increased traffic load, and preparation for 4G deployments. With the US economy's uncertain outlook in 2008, ABI Research expects North America's capex to remain flat this year, while other regions will increase their capex commitments for new 2G/3G deployments or expansions, all-IP service discovery platform upgrades, SoftSwitch unified core systems, and preparations for 4G. ABI Research calculates that capex investment in 2007 exceeded US$131 billion, and will reach US$163.5 billion in 2013.

The Asia-Pacific and North American regions are estimated to be the biggest spenders, according to research analyst Hwai Lin Khor. "Mobile industry spending in the Asia-Pacific area is primarily driven by the emerging markets that are expanding current 2G network footprints and new 3G rollouts; many nations in this region have yet to release their 3G licenses. Mature markets such as Japan, Korea, Taiwan, and Hong Kong will be spending on service delivery platforms, 4G base stations and related components, IMS, and in-building wireless systems. North American spending is primarily driven by 3G upgrades to HSDPA/HSPA for the WCDMA evolution and EVDO Rev A for the CDMA evolution, as well as activities around mobile WiMAX."

Most current capex is still directed to voice services and 2G networks expansion, as the majority of subscriber net adds in recent years are coming from emerging markets that are fairly contented with simple voice calls and messaging services. However, there is also increased awareness of the need for early investment to ensure that networks are ready to support the capacity demanded by higher bandwidth data services. Increased Edge, 3G, and subsequently 4G deployments will mean higher capex investment for data services and for the respective technologies.

"Capex for data services will surpass that for voice sometime in 2009 as 4G starts to arrive," says Hwai Lin Khor. "ABI Research believes that by 2013, the percentage split will be 28% for voice, 67% for data, and 5% for mobile TV.