Carrier Capex Rising

April 7, 2005

According to this report from Infonetics, telecom carrier capital expenditures are continuing a comeback trend:

North American Telecom Carrier Capex to Grow 5% to $61B in 2005 After Holding Steady in 2004

The 5% growth comes after�only a�fraction of a percent growth in 2004, but that was after three years of "drastic cuts," according to Infonetics analyst Kevin Mitchell. "Another noteworthy trend," says Mitchell,�"is how fast mobile subscribers are closing in on access lines, with mobile subscribers now at 90% of PSTN lines, up from 77% at the close of 2003. North American mobile subscribers grew 13% between 4Q03 and 4Q04, from 145 million to 164.3 million. We could easily see mobile overtake access lines in 2005."

Infonetics' release cites these telecom capex highlights from 2004:

-- DSL subscribers increased 44% between 4Q03 and 4Q04 to 16.5 million
-- Cable Internet subscribers increased 27% between 4Q03 and 4Q04 to 21.4
million
-- RBOCs and Canadian ILECs increased their capex in 2004 and will
increase it again in 2005, particularly on IP/MPLS routers
-- Cable companies decreased their capex between 2003 and 2004, but will
increase spending a bit in 2005, mostly on voice equipment and IP/MPLS
routers
-- Broadband lines equaled 21% of access lines in North America
-- North American carrier revenue is projected to be flat in 2005 after
inching up in 2004

AB -- 4/7/05