Wireless Infrastructure Market at an Eight Year Low in First Quarter, At Least Two More Quarters of Pain

​Wireless infrastructure equipment revenues hit an eight-and-a-half year low in the first quarter of 2012, and the second quarter is not looking much better.

“Total revenues for wireless network equipment reported by the vendors for 1Q2012 were only US$11.4 billion,” says Jim Eller, principal analyst, wireless infrastructure.  “This is the lowest amount that we have seen since 3Q2003.  First quarter revenues were down 17% from the previous quarter.”

The second quarter is not looking much better.  Ericsson’s second quarter results, announced this week, showed just a 9% increase in sales from the first quarter.  Preliminary results this week from Alcatel-Lucent and ZTE also predict slight increases in revenues, but fall far short of expectations.

The big concern is profitability.  Ericsson’s second quarter results showed a 63% drop in net profit year-on-year.  Both Alcatel-Lucent and ZTE have released profit warnings this week, with Alcatel-Lucent expecting a loss of around €40 million for the second quarter, and ZTE expecting a year-on-year decrease of 60% to 80% in profit for the first half of 2012.

“With continued economic uncertainty around the world, mobile network operators are holding back on investments in their network infrastructure,” says Aditya Kaul, practice director, mobile networks.  “Instead of buying new equipment, many operators are choosing to upgrade existing equipment, which is less profitable for the equipment vendors.  We expect wireless infrastructure spending to be weak for at least two more quarters, until operators might be able to see a light at the end of the tunnel.”

Vendor revenues and market shares are tracked by ABI Research’s Macro Base Stations Market Data.  This quarterly market data report tracks base station deployments by technology, region, and country.  The data also includes forecasts for new deployments, upgrades, and replacements annually through 2017, as well as operator base station spend estimates and lights at the end of tunnels.

These findings are part of ABI Research’s Macro Basestations Research Service which includes additional Competitive Analyses, Vendor Matrices, Market Data, and Insights.

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