Simply Slashing Network CapEx Will Harm Telco Operator Sustainability
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Simply Slashing Network CapEx Will Harm Telco Operator Sustainability

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Simply Slashing Network CapEx Will Harm Telco Operator Sustainability PR Newswire SINGAPORE, June 19, 2012 SINGAPORE, June 19, 2012 /PRNewswire/ -- Delta Partners, the leading TMT advisory and investment firm released its latest article

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Simply Slashing Network CapEx Will Harm
Telco Operator Sustainability
PR Newswire
SINGAPORE, June 19, 2012
SINGAPORE
,
June 19, 2012
/PRNewswire/ --
Delta Partners, the leading TMT advisory and investment firm released its latest
article today titled "CapEx - quo vadis? Managing Network ROIC".
Over the last few years, investors are increasingly shifting their valuation
criteria from revenue growth to return on invested capital (ROIC). As a
consequence, operators must step up to improve the way they manage their
biggest investment item: network CapEx
CapEx levels and trends across regions vary significantly:
Mature markets have a lower CapEx/Sales ratio than developing markets (
Latin
America
is the only developing region that has managed to bring its CapEx/Sales ratio
down to mature market levels)
There is no homogeneous CapEx/Sales ratio across developing regions
Going forward, Delta Partners predicts mature regions such as
North America
and
Western Europe
will remain broadly stable, "around 13 - 14% CapEx
efficiency" while emerging regions will decline but remain at a higher level of
CapEx/Sales ratio if operators manage to address the CapEx challenge of
additional new technologies (3G, LTE etc.) and exponential data traffic growth.
The article discusses six steps telco operators can take to improve network
ROIC saying that, "the days that operators could afford to take decisions on
CapEx independent of commercial strategies (and vice versa) are over.."
"Operators must be more long term focused when it comes to Network CapEx -
thinking about short term cost cutting or traditional blanket approach for
network roll-out could be detrimental to telco operators," adds Xavi Anglada,
Partner at Delta Partners.
In conclusion, Delta Partners believes that operators must have a clearer focus
on one of their most sizeable expenditures - Network CapEx. Blindly cutting
back on network CapEx to save costs is short sighted as it could harm the
sustainability and competitiveness of operators. However, operators must
implement a more rigorous and consistent approach, focused on ROIC, that
delivers on the expectations of shareholders and investors whilst maintaining
competitive.
To read or download the complete article visit
http://www.deltapartnersgroup.com/our_insights/articles
For more about Delta Partners please visit http://www.deltapartnersgroup.com