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The wave of mobile operator consolidation in North America will reduce infrastructure expenditures by US$2.5bn during the 2005-2009 period according to the latest Pyramid Research forecasts. Through the combination of networks, the New Cingular will reduce CAPEX by US$5bn over a five year period compared to AT&T and Cingular’s combined CAPEX projections compiled last year. Similarly, the merger of Canada’s Rogers and Microcell will result in a US$170m decrease in equipment investment.
While there is an overall decrease in infrastructure investment from consolidation, Pyramid Research Senior Analyst Taha Rangwala states, “Consolidation opens a significant opportunity for vendors to increase revenues by providing network management and optimization services – especially as operators must integrate networks and redeploy infrastructure within and outside their current network coverage.” As an example, Rangwala expects “Cingular to redeploy roughly 25-30% of AT&T’s cellular infrastructure to expand coverage into new markets and using the remaining base stations to support existing subscribers and fill coverage gaps in key metro markets.”
Dampening the impact on equipment sales from market consolidation is greater than the expected increase in minutes of use and subscriber uptake. Rangwala concludes, “The recent activity is a hit to equipment vendors, which can be countered by landing service contracts for network management and other services.”
Related Resources:
Conference Call: Mobile CAPEX Outlook for a Consolidated North American Market
Global Mobile CAPEX Handbook
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