Mobile capital expenditure in Western Europe contracted 3.8 percent quarter-on-quarter (QoQ) even though mobile operators are building out coverage for 4G, and to a lesser extent enhancing capacity and coverage of their 3G networks. Not only was QoQ spend down but also, year-on-year (YoY) growth was down significantly (19 percent). “Overall capital expenditure for the region is expected to drop 12 percent to $14.4 billion for the year. Western European carriers are at different stages in development which will very likely impact 4G adoption patterns,” said Jake Saunders, VP for Forecasting at ABI Research:

  • T-Mobile’s capital expenditure in the first half of 2012 was 4.9 percent lower than the previous year, although it is prioritizing LTE roll-out. The operator’s capital expenditure in the Europe region as a whole was €792 million; a YoY decline of 8.8%. The operator cited the difficult economic climate and tightened access to funds.
  • Vodafone also trimmed its capital expenditure. Spending was down £0.1 billion YoY but the investment continued to make improvements to coverage and quality of service.
  • For France Telecom, investment in networks, which represented 55 percent of the group’s capital expenditure in the first half of 2012, rose 6 percent. In France, there was an acceleration of investment in very high-speed mobile 4G and an increased investment in mobile capability. In Spain, an increase of €40 million YoY was linked to the acceleration of the mobile access network renewal program.

For Telefonica, capital investment was a mixed bag in Europe. In Spain, capex for the 1H-2012 year was €787 million, down -12.7 percent YoY. The operator claims that because it has achieved substantial “quality indicators improvements,” it meant the operator could reduce capex. In UK, capex reached €375 million by June 2012 with a YoY increase of 9.5 percent. Telefonica UK improved coverage and capacity of its mobile network, and refarmed 900 MHz spectrum in urban areas. In Germany, the boost in capital expenditure of €271 million in 1H-2012 was driven by an expansion in LTE network deployment.

ABI Research’s study, “Mobile Capital Expenditure Forecast: Western Europe,” focuses on the Western European region and includes base station and core network data. It is part of ABI Research’s Mobile Capex Database Service which includes Market Data, Insights, and Competitive Assessments.