Andrew Gardiner of Barclays took a detailed look at trends throughout the United States regarding the spenders and vendors in the telecom infrastructure industry. “We take a look at the most glaring disconnect from 1Q15 results, namely the dramatic decline in U.S.-driven equipment revenue,” Gardiner wrote. “The market anticipated a slower start to the year for U.S. carrier capex, but the significant double digit year over year declines in vendor revenue suggest a greater shift within operator networks as focus remains on balancing the need to support rising data traffic with optimizing network operating costs. We continue to view the wireless infrastructure end market as challenged, even more so given the material drop in revenue that vendors are experiencing post-4G deployments.”
It was well-discussed at this year’s 2015 Wireless Infrastructure show that telecom capex had a slow start this year, but overall it is expected to gain momentum in the second half of the year. Even with a slow start, it looks like the telecom equipment sector in the U.S. is under pressure. “The telecom equipment vendors struggled to monetize mobile data growth during the heavy buildouts of the U.S. 4G networks, so what chance do they have when such heavy investment projects are waning?” Gardiner asked. “In 1Q15, mobile equipment vendor revenue in North America declined by 17% year over year in our estimates, off the already weak comp of -21% year over year in 1Q14. We do expect trends to improve during the year, but still forecast a double digit sales decline for 2015. As one of the biggest and of late forward thinking markets, such revenue pressure augurs poorly for mobile equipment spending.” View the entire Barclays report here.
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