Demystifying Opex and Capex Budgets

Carrier capital expenditure (Capex) is undergoing a dramatic transformation under the combined effect of factors ranging from demand for additional capacity to convergence and network evolution towards next-generation networks (NGNs). The analysis of operator capital spending and the assessment of the business opportunity for telecoms OEMs has traditionally been confined to carrier spending on network infrastructure. As the size and allocation of operator Capex shifts dramatically in response to industry dynamics, the Opex line item in operator’s income statements has become a holy grail for vendors.

Today, mobile operators, for instance, spend three times more on Opex than Capex, or a total of US$400-500bn annually. Not all of that Opex spending is available to equipment suppliers and vendors, however. Although many operators have outsourced business functions such as IT, call centers, and other areas, Network Services is the focus of most of the outsourcing that pertains to the equipment supplier and vendor market. Today, Network Services is an US$80bn spending area; Pyramid Research believes that US$30-35bn of this is directly accessible by the major telecommunications vendors, like Ericsson, Alcatel-Lucent, Nokia-Siemens, Motorola, and their peers.

This 25-page study helps to quantify operator network capital and operating investments worldwide. It examines how network-related spending among different functions is allocated by operator type, mobile, wireline incumbent and wireline challenger. Conducted online, this survey of roughly 100 operator network executives offers critical insight into the priorities and needs fueling operator decision making and helps vendors stay competitive by diversifying services offerings and appealing to operator sensibilities.