KUALA LUMPUR (Jan 30): Telecom service providers’ (SP) revenue is forecast to grow at a slower compound annual growth rate (CAGR) of 2.9% over the 2010-2017 period, down from the historic CAGR of 3.6% achieved in 2004-2010.

Australia-based independent technology analyst firm Ovum said there would be a similar slowdown in capital expenditure (capex), with capex expected to expand at only 3.1% in 2010-2017 from the 6.5% growth recorded in 2004-2010.

In a report entitled “Prepare for slower-growing telecom revenue and capex” released on Monday, Ovum said the telecoms industry rebounded in 2011, with service provider revenues and capex growing robustly compared to the same period in 2010.

It said SP capex and revenues grew an estimated 12% and 7% respectively in 2011, with capex reaching US$314 billion and revenues US$1,962 billion.

Report author and Ovum principal analyst Matt Walker said 2011 represented a good bounce-back for the industry.

However, Walker said that macroeconomic weakness was constraining top-line SP revenue growth.

“Service providers are coping with this reality by aggressively attacking their cost structures, both capex and opex,” he said.

On the capex front, Walker said that SPs have a number of tools to control costs without necessarily sacrificing competitiveness: network sharing, software-based network elements and features, pay-as-you-grow contractual terms, joint procurement, and M&A will all be important.

According to the report, on the opex side, carriers are increasingly turning to outsourcing, which has helped expand the telco infrastructure services market to US$71 billion.

Walker said this shift of SPs' opex to external vendors through outsourcing would bring new opportunities, particularly in the area of services.

“Also, mobile operators’ share of total capex will continue to advance, from 56% in 2011 to 62% in 2017.”