Demystifying Opex and Capex Budgets

Published by: Pyramid Research

Published: Feb. 1, 2007 - 27 Pages

Table of Contents

Section 1. Introduction to Operator Network Manager Survey

Scope and Methodology

Profile of Survey Respondents

Definition of Network Functions

Section 2. OpexTrends Across Mobile, Wireline Incumbent and Challenger Networks

Network Opex:OpexRatio: Today and Over Three Years

Operator Attitudes to Managed and Hosted Services

Breakdown of Network Opex: Transmission, Core Network and Maintenance

Where Maintenance OpexGoes

Spare Parts Management: Conducted In-house or Outsourced?

Network Optimization Spend: Today and Over Three Years, Internalor Outsourced?

Operations and Process Consulting Services OpexTrends

Section 3. CapexTrends Across Mobile, Wireline Incumbent and Challenger Networks

Capex-to-Revenue Trend Over Three Years

Network Equipment Investment Trends

CapexAllocation to Network Design and Planning

Operator Spend on Civil Works

Backhaul CapexTrends

CapexAllocation to End-user Services Platforms, and Service Delivery Solutions

Charging and Payment Solutions CapexTrends

Investments in Network Management Systems and Network Assurance:Today and Over Three Years

Service Optimization and Assurance CapexTrends

Section 4. Key Takeaways

Abstract

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.

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