The worldwide recession predictably slowed down the global telecommunications market as wireless carriers, broadband providers and data-center owners struggled with falling profits and a lack of sufficient capital to fund expansions or upgrades. While financial markets remain unsteady, international firms say the industry is poised to rebound next year as companies resume plans to invest in networks and facilities.
Despite a decrease in global telecommunications capital spending in 2009, the industry’s annual revenue is expected to grow at a compounded rate of nearly 10.3% over the next five years and reach $2.7 trillion by 2013, according to a report from Boonton, N.J.-based market research firm Insight Research Corp. Driving the growth is robust demand for communications services in developing countries and high-speed broadband in established markets. “The worldwide economy is in turmoil, there is no doubt about that, but over the long haul we expect the telecommunications industry to continue growing,” says Insight president Robert Rosenberg. “Telecom is as necessary to development as roads and bridges, so we expect it to fare much better than other economic segments that may take longer to return to normalcy.”
Last year’s financial crisis forced a number of wireless carriers to reconsider investment strategies and in some cases scale back plans. Still, projects are progressing. “The economic downturn resulted in a serious slowdown in the roll-out of networks and investments in developed markets and a modest decrease in activity in emerging markets,” says Ulrik Strottrup-Andersen, technical director for Copenhagen-based Ramboll Telecom. “Lately, we have observed a trend where once again rollouts are being resumed around the world.”
Elsewhere, operators continue to expand basic communication services in Southeast Asia, Eastern Europe and parts of the Middle East. But Africa remains the fastest-growing telecommunications market in the world. One-third of Africa’s one billion people own a mobile phone—a number expected to drastically increase in the coming years. Estimates suggest 15,000 new mobile phone towers are needed annually to meet the increasing demand for telecommunications networks in Africa.
Across sub-Saharan Africa, telecommunications companies are battling for control of the wireless and broadband markets. European telecommunications giants such as France Telecom and Vodafone are continuing to invest hundreds of millions of dollars in the continent to maintain a competitive advantage. Ramboll is supplying thousands of towers for Vodafone, Ericsson and Huawei for buildouts in Ghana, Nigeria, Ivory Coast and Gabon.
As the bandwidth needs of consumers and corporations surge, so does the demand for data centers. Data-center space in Southeast Asia is anticipated to grow by 68% over the next four years, with most of the expansion occurring in Vietnam, Singapore and India, according to BroadGroup, a telecommunications consulting firm based in Surrey, England.
While tough economic conditions have not dampened activity in the data-center market, they have motivated companies to find ways to reduce the cost of building and managing data facilities. Consequently, some international engineering firms now are starting to offer facility-management services. Vienna-based construction firm Strabag SE chose this route and last year acquired DeTeImmobilien, a branch of Deutsche Telekom. In doing so, Strabag became the largest facilities-management company in Hungary and the second-largest in Germany. The firm currently is working on a $23-million, 4,000-sq-ft data center in Munich, slated to become operational next fall, and 32 new call- center projects around Germany, scheduled to be completed in 2011.
“We see a market increase in 2010,” says Thomas Gartung, head of Strabag’s DeTeImmobilien Services division in Frankfurt. “Small and mid-sized companies are starting to require their own data centers for security reasons, but they do not want to take the risk of designing, constructing and operating these facilities, so the projects are being outsourced.”