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Investment in telecom
Submarine Cable NewsFeed - Market Snapshot
Wednesday, 25 September 2013 08:31

One of the big clouds that always hangs over the submarine fiber optic cable industry is how willing the investment community will be in the near term to fund new cable systems.  Part of this concern is due to the fact that submarine cable systems are so expensive to manufacture and install.  Another factor, however, is the investment community's overall view of the telecom market -- is it a good investment in general, or are there other markets that banks want to invest their money in.  

SubCableWorld has been looking at this issue in various ways since the last big bust period of the submarine fiber optic cable market in the early years of the last decade.  This was a period in which banks completely pulled out of the market, refusing to even consider funding new cable systems for a period of nearly three years.

Since then, we have followed various indicators to try to gauge the investment community's view on the submarine cable market.  The results have been mixed for the past five years or so -- many cable systems have been funded, but banks remain cautious.

Investors' view of submarine fiber optic cables also has to be seen in the broader context of the submarine cable in the overall telecom market.  This view is promising, however.  Banks appear bullish on telecom and investment in all sorts of new telecom technologies is strong.

A recent indication of this strength comes from market research firm Ovum, which is forecasting that IT spending will grow considerably through 2017.  The company notes that global telecoms industry’s revenues will remain roughly flat over the next few years, with a decline in spending on voice services counterbalanced by growth in spending on mobile and fixed (broadband) data services, according to global analyst firm Ovum.

In a recent market forecast analysis report, Ovum found that as growth slows, market realities mean telcos must find ways to serve their existing customers profitability rather than simply growing their customer bases.

Shagun Bali, analyst for Telecoms Technology at Ovum and author of the report said, “Over the next five years, service and tariff innovation will be key revenue-generating strategies, while LTE rollout, network optimization, and creative approaches to partnerships will become focal points for cost savings. Telcos need to monetize new business models, leverage customer data by investing in analytics, and define their response to over-the-top (OTT) players.”

Ovum estimates that telco IT spending will reach US$60bn in 2017, growing at a CAGR of 0.6 percent between 2013 and 2017. Growth in telco IT spending will be driven primarily by investments in packaged software and system integration. Spending in emerging markets in Asia-Pacific, the Middle East and Africa (MEA), and South and Central America (SCA) will drive global IT spending. In North America, telco IT spending will grow modestly at a CAGR of 0.8 percent to reach US$17.5bn by 2017.

For more information, go to Global Telecoms Technology Spending Forecast Through 2017: Analysis.