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Demystifying Opex & Capex Budgets - Feedback from Operator Network Managers
Pyramid Research, Inc., Feb 2007
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; we believe 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.
Sample Survey Questions
We asked 25 questions, including the following:
- What % of Opex is allocated to Network Opex? How will Network Opex:Opex ratio change over the next three years?
- What % of network Opex is allocated to the operations and maintenance of the core network?
- What % of network Opex is allocated to maintenance services? How will maintenance Opex: network Opex change over the next three years?
- What % of maintenance expenditures is allocated to field maintenance, remote support, software updates, repair and replacement, and the management of spare parts?
- What % of network Opex is allocated to network optimization? How will it change over the next three years? Who conducts network optimization for your network?
Study results and analysis include:
- Raw data in Excel format
- 27 slide data presentation
Benefits
The Demystifying Opex & Capex Budgets study provides quantitative intelligence on spending patterns of wireline and
mobile operators, offering insight into the overall market potential. The study supports business planning activities of
vendors and equipment manufacturers with direct insight from their operator customers. It draws upon hard facts
derived from the operator survey to provide the most accurate opportunity assessment.
This program assists vendors worldwide to:
- Quantify demand and operator spending by network area
- Identify the best opportunities to align capabilities and offers
- Develop more accurate forecasts to deploy resources and go-to-market execution
- Align service positioning and marketing with operators requirements
Survey Methodology
We conducted an online survey at the end of 2006. The purpose of the survey is to understand how operators allocate their network Opex and Capex among the different network functions identified by us.
The survey respondents were comprised of network executives in the operator community across the world and we have presented the responses as received. The survey included 25 questions.
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