We have gathered data for over 50 operators across the world to gauge global trends in operator
spending, based on input from the Exane BNP Paribas Telecoms team and on the capex guidance
of operators. We forecast flat capex this year, with strength in the EU and weakness in the US.
We expect flat mobile capex in 2015 in local currencies (-6% in USD)
After a strong but uneven 2014 (+6% capex growth), the current-year capex plans of operators
suggest a more muted environment, with aggregate constant-FX capex broadly flat (-6% in USD).
European spending set to further expand (+7% in local currency)
Vodafone is no longer the only spender. Our analysis suggests Europe still has a long way to go to
catch up with advanced LTE markets, in terms of both population coverage and penetration. We
also doubt that Vodafone can afford to phase down its Project Spring aggressively in 2016. For
vendors, more margin-friendly capacity upgrades are clearly on the cards, as the rollout-intensive
modernisations to single-RAN are now over in Europe.
After a dismal H1, we expect a strong recovery in US capex in H2
US capex had an unusual seasonality in 2014 (H1 stronger than H2), a trend that is reversing this
year. In a contracting market (-6% in USD), H1 is showing steep capex declines (particularly at
AT&T, -40%), with stabilisation/recovery set to follow in H2. AT&T has scaled back on its
aggressive small cell programme and will instead add macro capacity starting this summer. The
newly acquired AWS-3 spectrum should be populated with fresh capacity in the course of 2016.
We reiterate our Outperform stance on European names; highest upside for Ericsson
After a difficult start to the year, Ericsson’s Q2 results corroborate our scenario of stabilisation and
improvement going into H2. Cost-cutting initiatives are well under way and the business mix should
significantly improve: we reiterate our SEK120 TP (12% LT margins). As for Nokia-ALU, we believe
the deal will go ahead as planned with little likelihood of parity revision. Value creation is a little
more remote: full synergies by 2019 vs the completion of Ericsson’s cost-cutting actions by 2017.