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Telecom Spending Up Slightly On Mobile Demand

In the U.S. the two largest carriers -- AT&T and Verizon Communications -- have seen their capital expenditures flatten out in recent years.
Telecommunications service providers around the globe are expected to increase their capital expenditures (CAPEX) at a compounded rate of 2.4% from $199.6 billion in 2010 to $224.5 billion in 2015, according to a report from Insight Research Corporation.

Noting that different regions in the world are earmarking different rates of financial investment for telecommunications, the market research firm said overall spending globally is likely to continue to be positive, because of the strong demand for mobile services in developing countries.

However, the slowdown in developed countries is likely to continue and is attributed to the fact that carriers there generally have already made their biggest down payment for new networks.

"It was no surprise when our analysis showed that operator CAPEX in the U.S. and the 27-member EU states dropped sharply in 2009," said Insight's president Robert Rosenberg in a statement, adding that it is "somewhat less obvious that while spending in those regions will subsequently recover, they will not recover to 2008 levels over our forecast period."

In the U.S. the two largest carriers " AT&T and Verizon Communications -- have seen their capital expenditures flatten out in recent years. AT&T, for instance earmarked $17.3 billion in 2009 and is expecting to spend between $18 billion and $19 billion in 2010 as the firm has been pressed to build out its wireless network by the success of its exclusive marketing contract for the Apple iPhone. AT&T spent $20.3 billion in CAPEX in 2008. Verizon's expenditures were $17 billion in 2009.

"The recovery of operator post-2009 CAPEX spending cannot mask the secular trend of declining investment in developed countries," said Rosenberg. "This is the result of principally three factors: completion of broadband rollout programs, mobile sector saturation, and technology uncertainty, and operator margin pressure due to competition and the absence of a compelling service value proposition."