Mobile Capex Holding Firm in Africa and the Middle East Despite Down Economy

Strong subscriber growth and sustained levels of revenue in Africa and the Middle East will encourage mobile operators to carry on with their capex plans for 2009 and 2010, according to a report from Pyramid Research.

Recent reports from global network vendors and operators have confirmed the inevitable: Global capex is on the decline, notes Dearbhla McHenry, analyst at Pyramid Research and author of the report. "However, spending in AME is holding steady so far - AME is one of only two regions that will actually see an increase in total telecom revenue in 2009, mainly due to the late development of the mobile sector and a recent move to address pent-up demand for mobile services in AME," she says.

"Pyramid forecasts a similar resilience in its capex spending, due to the region's ongoing unmet need for basic telecom infrastructure," says McHenry. "Whereas capex in developed countries is driven primarily by service enhancements and operator differentiation strategies, capex in AME is driven primarily by the need for more capacity and coverage in order to keep up with organic growth of the subscriber base in many of the region's largest (and poorest) markets," she explains.

Increasing wireless broadband uptake and new licensing, acquisitions, and privatization will also bring new money to the region and help drive capex spending over the next two years. Furthermore, the list of operators interested in increasing their footprint in AME is still a long one. "Zain, MTN, and Etisalat are all keen to enter African markets while penetration is still low. Global operators, such as France Telecom, Telefonica, and Vodafone, have also realized that future growth will come largely from emerging markets and have turned their sights on Africa," McHenry says.

Posted to the site on 3rd June 2009