Asian Telecoms Will Spend $54 Billion This Year: Report

Capital spending increased by 11% last year, and will grow 3% this year, led by China.

May 19, 2005

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Asian telecommunications carriers increased capital spending in by 11% last year, according to a new report from Infonetics Research, and the trend is expected to continue, though at somewhat reduced levels.

Indeed, Infonetics Research's biannual Service Provider Capex Analysis, Asia Pacific report forecasts a 3% rise in Asian telco capital expenditures this year, bringing spending levels to $54.2 billion, compared to $52.4 billion in 2004. The spending increase paralleled a growth in carrier revenues, which were up 11% last year to $257.2 billion. Infonetics expects revenue to increase 6% this year, to reach $273.2 billion, with much of the growth driven by independent mobile carriers.

"Much of the revenue growth in Asia was in China, where revenue increased 58% in 2003 and 27% in 2004, although the majority of revenue still hails from Japanese carriers, which accounts for more than half of all Asia Pacific revenue," Infonetics directing analyst Kevin Mitchell said in a statement. "While investments are slowing, carriers are still spending 20% of their revenue on capex, a higher portion compared to European and North American carriers, indicating they're still investing. Indian and Chinese carriers have even greater capital intensities."

The investment seems to be paying off, as Asian telcos added new lines and subscribers at an impressive rate in 2004. According to Infonetics, the number of Asian digital subscriber line (DSL) subscribers rocketed to 35.9 million, a 60% increase in the last quarter of 2004 alone. The number of access lines increased 2% to 386.3 million and the mobile subscriber base grew 6% to 341.5 million last year. Mobile communications continued to be hot and, by year end, the ratio of mobile subscribers to access lines was 88%.

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