Simply Slashing Network CapEx Will Harm Telco Operator Sustainability

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• Publié par: delta-partners
• Nombre de lectures: 10
• Langue: English

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Simply Slashing Network CapEx Will Harm

Telco Operator Sustainability

PR Newswire

SINGAPORE, June 19, 2012

SINGAPORE

,

June 19, 2012

/PRNewswire/ --

Delta Partners, the leading TMT advisory and investment firm released its latest

article today titled "CapEx - quo vadis? Managing Network ROIC".

Over the last few years, investors are increasingly shifting their valuation

criteria from revenue growth to return on invested capital (ROIC). As a

consequence, operators must step up to improve the way they manage their

biggest investment item: network CapEx

CapEx levels and trends across regions vary significantly:

Mature markets have a lower CapEx/Sales ratio than developing markets (

Latin

America

is the only developing region that has managed to bring its CapEx/Sales ratio

down to mature market levels)

There is no homogeneous CapEx/Sales ratio across developing regions

Going forward, Delta Partners predicts mature regions such as

North America

and

Western Europe

will remain broadly stable, "around 13 - 14% CapEx

efficiency" while emerging regions will decline but remain at a higher level of

CapEx/Sales ratio if operators manage to address the CapEx challenge of

additional new technologies (3G, LTE etc.) and exponential data traffic growth.

The article discusses six steps telco operators can take to improve network

ROIC saying that, "the days that operators could afford to take decisions on

CapEx independent of commercial strategies (and vice versa) are over.."

"Operators must be more long term focused when it comes to Network CapEx -

thinking about short term cost cutting or traditional blanket approach for

network roll-out could be detrimental to telco operators," adds Xavi Anglada,

Partner at Delta Partners.

In conclusion, Delta Partners believes that operators must have a clearer focus

on one of their most sizeable expenditures - Network CapEx. Blindly cutting

back on network CapEx to save costs is short sighted as it could harm the

sustainability and competitiveness of operators. However, operators must

implement a more rigorous and consistent approach, focused on ROIC, that

delivers on the expectations of shareholders and investors whilst maintaining

competitive.

To read or download the complete article visit

http://www.deltapartnersgroup.com/our_insights/articles

For more about Delta Partners please visit http://www.deltapartnersgroup.com