Renaissance in the Telecom Equipment Market, states Arthur D. Little
LONDON -- February 10, 2014
As an update to its 2008 and 2011 reports, Arthur D. Little has reviewed the
performance of leading telecom suppliers in its latest Viewpoint, “Suppliers –
on the Road to Redemption? Arthur D. Little’s 2013 Telecom Infrastructure
Supplier Outlook.” The Viewpoint is based on a global survey of over 150 Chief
Technology Officers and Chief Procurement Officers.
“After four tough years and significant M&A activity, the industry is showing
initial signs of market repair,” states Clemens Schwaiger, a Principal in
Arthur D. Little’s TIME practice, “as a result of a number of consolidations
and positive underlying demand for its equipment and services.” In 2012, 56
percent of the top 26 operators spent more revenue on Capex than in 2011. This
trend is expected to continue, leading to the telecom network equipment and
services market delivering healthy growth of 3 to 4 percent CAGR between 2012
and 2017. According to the survey, LTE/SAE, All-IP (Edge and Core), and
Network Maintenance and Operations will be the fastest-growing segments.
However, the industry is still generating little cash despite turnover of USD
125 billion and positive top-line growth. In 2012, the five dominant players
generated only USD 8 billion in net operating cash flow. This is an issue, as
financial stability is one of the key criteria in procurement decisions.
Asian players have made considerable inroads, now accounting for 38 percent of
industry revenue. Many operators see Huawei as an incumbent. Ericsson is
another leader, followed by NSN, Alcatel Lucent, and ZTE. A majority of
respondents expect the industry to move toward a competitive market of four
financially healthy players with comparable product portfolios.
Network equipment suppliers are changing their business offerings to align
with the strategic needs of telecom operators, positioning themselves as
high-end managed service providers. Arthur D. Little offers a range of actions
that suppliers and operators can take to maximize the emerging opportunities.
“Suppliers and operators will need to work together to manage the transition
from growth to efficiency,” states Karim Taga, Global Leader of Arthur D.
Little’s TIME practice. “The business models of operators will dramatically
change, and suppliers must respond.”
The full report is available at: www.adl.com/Suppliers.
Arthur D. Little
Sue Glanville/Rob Hickling
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