<<China cuts 2010 telecom capex by 21 percent
Ericsson, FPGA makers take a hit as 3G party winds down
Rick Merritt
EE Times
(03/24/2010 5:56 PM EDT)
SAN JOSE, Calif. — With its 3G building binge largely over, China's three major telecom operators will cut their spending on capital equipment by more than 20 percent in 2010. The decline is greater than expected, driving analyst to anticipate lower revenues for system and chip makers including Ericsson.
China's carriers were a bright light in the downturn of 2008-2009 as they finally gave the green light to building out their 3G cellular networks. With the build outs largely complete, market watchers had expected declines in 2010, but not ones as steep as the carriers reported in recent quarterly financial calls.
China's carriers are now expected to spend a total of about 262 billion renminbi, down 21 percent from 2009, and mobile spending should be down about 25 percent, according to Barclays Capital. Flat spending in Europe and an uptick in U.S. mobile network spending will offset the losses.
Overall capex on wireless networks will dip 1.8 percent worldwide, according to a recent iSuppli report.
China Unicom which reported its plans Tuesday (March 23) is taking the biggest cuts, slashing its total capex budget 35 percent in 2010 to 73.5 billion renminbi.
China Telecom is keeping its wireline spending flat at about $28 billion renminbi, but it expects to cut its mobile spending by 50 percent in 2010 to about 26.8 billion renminbi after doubling mobile capex in 2010, Barclays reported.
For its part, China Mobile will only shave its total capex five percent in 2010. Like the other carriers, it will increase spending on wireless handsets as it tries to more than double its 3G subscribers to 10 million in 2010. For China Mobile that means about US$500 million in additional handset subsidies this year.>>
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