Service provider spending down, but capex-to-revenue up

FRAMINGHAM (10/06/2003) - North American service providers will spend $48.9 billion on capital expenditures in 2003, a 21 percent reduction from 2002, according to Infonetics Research Inc.

At the same time, however, service providers will increase their revenue by about 1 percent, bringing their capex-to-revenue ratio to a "healthy" 14 percent, according to the firm.

While a reduction in capital expenditure generally has a short-term negative effect on vendors selling to service providers, capex-to-revenue ratios of around 15 percent are a sign of financial health, Infonetics says.

RBOCs represent 44 percent of total capex spending in 2003, while IXCs, CLECs and Canadian ILECs account for 26 percent. Cable MSOs represent 23 percent, and IOCs account for 7 percent, Infonetics found.

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