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Apr 30 2009   1:10PM GMT

EU telecom profits and spending trends



Posted by: Tom Nolle
recession, EU, France Telecom, Deutsche Telekom, capex, Regulations

France Telecom missed consensus but had decent results, particularly in contrast to Deutsche Telekom’s miss earlier in the week. Mobile and TV services within France were the strong points; emerging market numbers and Eastern Europe were off.

Two interesting points: The company reiterated its full-year guidance and it indicated its capex-to-sales ratio was about 12%. This is well below the average of the industry in normal times. We’ve noticed that EU providers are being more sanguine regarding capex than those in many other markets, including the U.S.. We believe this to be in part because recovery there is not likely to come as quickly as in the U.S., and because of the threat of regulatory intervention on things like roaming rates and even access sharing that would likely lower profits.

The pan-EU regulatory program that creates this risk reached a compromise solution on file sharing and will now be sent to the member countries for ratification.

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Apr 16 2009   6:14PM GMT

EU telecom spending: Cost-cutting & pricing tiers on the table



Posted by: Tom Nolle
EU telecom, recession, tiered pricing, service layer, equipment vendors

The ITU has released information on the EU telecom markets that shows many of the largest countries are lagging smaller ones in their telecom infrastructure, and other reports show that there was more cost-cutting (meaning pushing back of projects) in March. Our information shows that EU telecoms are planning an off-cycle planning exercise in the May timeframe to decide which of the 2009 projects to continue to push back and which to now approve for spending.

This will be a critical step in the telecom recovery, and at the same time is likely to set the strategic framework for the 2009/2010 spending cycles. We believe that the program will not reflect additional monetization strategies at the service layer since operators tell us that vendors have still not provided convincing support for new strategies, and thus will be more likely to cut costs.

A third of all Tier 1 operators are now actively planning for pricing tiers and caps, and all who have mobile assets, are planning further shifts to mobile. Metro infrastructure is more likely to be funded than “core” networks.

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Jan 19 2009   5:36PM GMT

IT to return to cheap-cost focus — forever?



Posted by: Tom Nolle
IT spending, SOA, recession

The Economist has recently published a story on the impact of the recession on tech, and while we don’t fully agree with the conclusions there are some very important points made. The most significant is that buyer behavior in IT spending is not automatically going to recover—ever.

The article cites a flight to cheapness, a return to a pure cost focus, as major risks to tech. Our own research in this area has long showed the root problem isn’t the downturn, but the timing of the downturn relative to the 2001 slump and the broader cyclical pattern of spending.

We ended a strategic IT cycle with the slump in 2001 and should have launched a new one (based on the SOA/mashup paradigm) shortly after. Instead, IT spending has stayed at a historical low level relative to GDP ever since. We were in a pattern of IT commoditization that the SOA cycle was trying to break, and if the current downturn kills that cycle, it will be years before IT spending growth would recover to historical levels.

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