While several European countries are drowning in debt and global markets teeter back and forth depending on what happens there on a daily basis, the EU's largest telcos are "cash rich."
That's the determination of Infonetics Research, which has released pieces of its third quarter report, 2G/3G/4G (LTE and WiMAX) Infrastructure and Subscribers. The report delves into the mobile and wireless equipment markets, including vendor market share, forecasts, and LTE and WiMAX deployments. It seems that the big telcos are weathering the storm just fine.
“What many people seem to be overlooking in the midst of the European Union sovereign-debt crisis is that the EU’s ‘Big 5’ telecom operators – Deutsche Telekom, France Télécom, Telecom Italia, Telefónica, Vodafone – are cash rich, each with more than €10 billion in cash!" said Stéphane Téral, principal analyst for mobile infrastructure at Infonetics. “Yes, there are definitely challenges, and many telecom carriers, particularly in Europe and the Middle East, are going to have a tough time generating new revenue, but the fact remains that the telecom world is not falling apart. The fundamentals of the market are intact; service providers must continue upgrading their networks to manage relentlessly growing traffic. As a result, we maintain our view that this crisis continues to have minimal impact on telecoms overall."
The report says the mobile infrastructure market was down in Q3 (compared to Q2), but that's not unusual – it's happened four out of the last five years and is more due to seasonality. Overall, the market is up 9 percent from one year ago. LTE is driving growth, up 330 percent from a year ago.
"Now that Verizon’s LTE spending has passed its peak, the ‘LTE second wave’ has begun, led by AT&T and other operators around the world, along with the earlier-than-expected ramp up from Sprint. Combined, these activities are helping LTE take off even faster, prompting us to increase our LTE forecast," Téral said.
The future of WiMAX remains a question, the report says, simply depending on if more markets embrace it.
"Opportunities have expanded into the emerging smart grid segment, for instance, which is proving fruitful for WiMAX vendors – the WiMAX Forum has recently initiated its Smart Grid Working Group, and we are seeing more contracts from utility providers – as well as finding a niche as a WiFi backhaul solution.," said Richard Webb, directing analyst for microwave and small cells at Infonetics Research and co-author of the report.
The overall 2G, 3G, and 4G infrastructure market, including LTE and WiMAX equipment, totaled $10.8 billion worldwide, up 8.6 percent from 3Q10, and down 4 percent from the previous quarter. Global LTE equipment revenue, the report says, jumped 38 percent sequentially in 3Q11 over 2Q11, now more than double the size of the WiMAX equipment market.
Alcatel-Lucent is hanging on to the lead as top vendor in the LTE market, but Ericsson is hot on Al-Lu's heels, less that one market-share point behind. Huawei topped Samsung in Q3 for first place in WiMAX revenue market share.