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December 05, 2011

Telecom Market in Europe Remains Strong Despite Growing Debt Crisis: Report
By Narayan Bhat
TMCnet Contributor

Despite growing sovereign debt crisis, giant telecom operators of Europe still have huge sums of cash in the coffers, and the fundamentals of the telecom market have surprisingly remained intact, says the quarterly analysis of European telecom market by Infonetics Research (News - Alert).

Nevertheless, there are a few challenges. Carriers are facing the challenge of bolstering and upgrading their networks at a time generating new revenue is getting tougher.

The report also says that the global LTE equipment revenue jumped 38 percent sequentially in 3Q11 over 2Q11, and is now more than twice the size of the WiMAX equipment market.

In 3Q11, the 4G market (LTE and WiMAX combined) passed the $1-billion-per-quarter bar.

Stephane Teral, principal analyst of Infonetics Research, says Europe’s top five telecom operators – Deutsche Telekom (News - Alert), France Telecom, Telecom Italia, Telefonica, Vodafone – are cash rich, each with more than EUR10 billion in cash.

For an instance, Alcatel-Lucent (News - Alert) has continued to hold on to its hotly contested number-one position in the LTE market in 3Q11, less than one market share point ahead of  Ericsson (News - Alert).

 "Yes, there are definitely challenges, and many telecom carriers, particularly in Europe and the Middle East, are going to have a tough time generating new revenue, but the fact remains that the telecom world is not falling apart,” Stephane added.

As the fundamentals of the market are intact, the research firm believes that debt crisis will have minimal impact on telecoms market overall.

In 3Q11, the overall 2G, 3G, and 4G infrastructure market, including LTE and WiMAX equipment, totaled $10.8 billion worldwide, up 8.6 percent from 3Q10, and down four percent sequentially due to seasonality.

Teral adds, "So, despite a sequentially down third quarter for the overall 2G, 3G, and 4G mobile infrastructure market, which any vendor will tell you was due to seasonality (the third quarter has been down in four of the last five years), the market is up nearly nine percent from the year-ago quarter.

Lighting the way is the LTE equipment segment, up 330 percent from a year ago. Now that Verizon's LTE spending has passed its peak, the “LTE second wave” has begun, led by AT&T and other operators around the world, along with the earlier-than-expected ramp up from Sprint. Combined, these activities are helping LTE take off even faster, prompting us to increase our LTE forecast."

As expected, Huawei beat Samsung (News - Alert) for first place in WiMAX revenue market share in 3Q11.

Richard Webb, directing analyst for microwave and small cells at Infonetics Research and co-author of the report, adds, "Meanwhile, the long-term future of WiMAX will depend on diversification into new addressable markets. Opportunities have expanded into the emerging smart grid segment, for instance, which is proving fruitful for WiMAX vendors -- the WiMAX Forum has recently initiated its Smart Grid Working Group, and we are seeing more contracts from utility providers -- as well as finding a niche as a WiFi backhaul solution."

Narayan Bhat is a contributing editor for TMCnet. To read more of Narayan’s articles, please visit his columnist page.

Edited by Rich Steeves


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