In financially challenging times, service providers sometimes slow capital spending to boost operating margins and profits. Analysts at ABI Research (News - Alert) predict this will happen in 2009, in the face of global economic sluggishness.

 

ABI Research forecasts that 2009 is likely to show a reduced capitcal expenditure (CAPEX) growth rate of seven percent. The key point here is "slower growth," not negative growth. In most circumstances, seven percent annual CAPEX growth would be quite healthy for an industry the size of global telecom.

 

Also, if ABI Research is correct, 2009 levels of growth will dip just about 1.3 percent from 2008 levels.

 

In 2007, global capital expenditure by carriers stood at $131 billion. Despite the worsening credit crisis, 2008 will still notch up capital expenditure of $142 billion, or 8.3 percent. 

 

If ABI research is correct, a slowing of that level — 8.3 percent growth down to seven percent — might well qualify as good news for industry suppliers.

 

Some might not be so optimistic, but we won’t know until the first couple of quarters of 2009 which way carriers are moving. Presumably some observers think growth will slow much more dramatically.