Telecom Signaling Industry News

TMCNet:  Ovum reveals US$126bn opportunity for vendors looking to help telcos control network opex

[January 22, 2013]

Ovum reveals US$126bn opportunity for vendors looking to help telcos control network opex

(M2 PressWIRE Via Acquire Media NewsEdge) London -- Telecom service providers (SPs) must continue to focus on cost control to offset relatively flat revenue growth over the next five years. This is according to Ovum, which believes telcos have the potential to gain greater economies through their global vendors in terms of network rollout, network operations, network optimization, customer experience, and service quality management.

In new research*, Ovum forecasts just a 2 percent annual growth in telecom SP revenues between 2012 and 2018, as carriers struggle with increased over-the-top (OTT) competition, end users more interested in buying devices and apps than services, and limited customer appetite for usage-sensitive billing. With revenues moderating, SPs are keeping a tight lid on capital expenditures (capex), but this is only part of the story.

Service providers will keep a tight rein on their capex budgets, but they do need to spend heavily on technology both their customers and the competition demand this. Whats changing is that operators are more smartly attacking their operating expense (opex) budgets, which opens new opportunities for vendors, says Matt Walker, principal network infrastructure analyst at Ovum. However, to take full advantage of this growth opportunity, its crucial that vendors have a true understanding of telco opex something, which until now has been complicated by the lack of granularity and consistency in carrier financial reporting, amongst other barriers.

Ovums newly created taxonomy of opex segments across all operators reveals network/IT operations account on average for 18 percent of telco operating costs, of which 60 percent (US$126bn) is for spending internally, mostly using salaried staff.

If youre an operator, this is a huge cost that needs to be managed, comments Walker. As operators look to lower operating risks and their cost bases, one option is additional services projects that involve the transfer of employees.

However, to meet operators needs vendors will have to develop far more complex solutions for carriers than in the past. Carriers need help monetizing their networks and retaining customers, not just deploying the equipment.

While services projects dont come with guarantees of profitability, there is clearly some upside for vendors as carriers look to outsource more of their operations. As telcos explore this, vendors need to be creative and aggressive about winning the business but should not forget to protect themselves, concludes Walker.

A Growth Opportunity for Vendors: Telco Opex (Nov 2012) Global Service provider revenue and capex forecast: 4Q12 update (Dec 2012)* To arrange an interview or for further information please contact Claire Booty on +44 (0) 20 7017 7916, or email ABOUT OVUM Jointly awarded IIAR Global Analyst Firm of the Year 2012, Ovum provides clients with independent and objective analysis that enables them to make better business and technology decisions. Its research draws upon over 400,000 interviews each year with business and technology, telecoms and sourcing decision-makers, giving Ovum and its clients unparalleled insight, not only into business requirements but also the technology that organizations must support. Ovum is an Informa business.

((M2 Communications disclaims all liability for information provided within M2 PressWIRE. Data supplied by named party/parties. Further information on M2 PressWIRE can be obtained at on the world wide web. Inquiries to


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