There’s an old saying that says ‘what goes up must come down’—but this doesn’t seem to apply to capital expenditure (capex) in the telecoms industry. As Figure 1 shows, global capex levels have soared from just over US$50 billion to about US$325 billion in real terms over the past
They dipped briefly in the early part of each decade and at the height of the financial crisis in 2009, before resuming their relentless rise. Indeed, total capex levels have only once fallen by more than 5% since 1945.
Yet this massive investment isn’tproducing the returns the industry requires. We studied the financial performance of 78 fixed-line, mobile and cable telecoms operators with a collective annual capex of some $200 billion, nearly two-thirds of the industry’s total spend last year. (For details of our methodology, see Appendix 1.) Our research reveals that, in the past decade, the average
long-term return on investment (ROI) has been just 6%—three percentage points less than the cost of the capital itself
Nearly two-thirds say that capex is driven by technology, not business objectives
The single biggest factor is use of the wrong investment criteria. Nearly two-thirds of the executives we talked with told us that their capex planning is driven by technological considerations rather than business objectives.
Copyright iTulip, Inc. 1998 - 2016 - All Rights Reserved
Opinions expressed herein are those of the posters, not those of iTulip, Inc., its owners, or management. All material posted on this board becomes the intellectual property of the poster and iTulip, Inc., and may not be reposted in full on another website without the express written permission of iTulip, Inc. By exception, the original registered iTulip member who authored a post may repost his or her own material on other sites. Permission is hereby granted to repost brief excerpts of material from this forum on other websites provided that attribution and a link to the source is included with the reposted material.
Nothing on this website is intended or should be construed as investment advice. It is intended to be used for informational and entertainment purposes only. We reserve the right to make changes, including change in price, content, description, terms, etc. at any time without notice. By using this board you agree that you understand the risks of trading, and are solely responsible for your own investment and trading decisions. Read full legal disclaimer.
Journalists are not permitted to contact iTulip members through this forum's email and personal messaging services without written permission from iTulip, Inc. Requests for permission may be made via Contact Us.
Objectionable posts may be reported to the board administrators via Contact Us.