Q2 results: stability and modest growth give cause for cautious optimism

10 Aug 2009

Second quarter results are now in from most of the leading service providers and telecoms technology vendors. While it is far too soon to pop the champagne corks, an icy-cold beer or two might be in order: there are signs that the market is returning to normal.

The top ten telecoms equipment vendors saw revenues climb 4% compared to Q1, reaching USD63 billion. The eight largest all achieved a measure of positive growth. The market is cyclical, however, with the first three months of the year inevitably low, so growth in Q2 was only to be expected. In 2008 the growth from Q1 to Q2 was 5%, so this year’s growth rate is tracking reasonably well against that. Quarterly revenues are still 6% down from a year ago, giving a clear indication that the whole market has fallen, but given the depth of the global recession, the numbers could have been a lot worse. Most will take decent quarter-over-quarter growth as a cause for some optimism.

The telecoms services market is far less cyclical than the equipment market. The top 15 service providers saw their aggregated Q2 revenues climb by a fraction of one percent relative to the first quarter, reaching USD231 billion. This was up 3% relative to Q2 2008. The quarterly growth rate was in line with trends in 2008, but below longer-term historical trends, showing that the market is not totally impervious to recessionary pressure. TeleGeography predicts the growth rate will pick up again over the remainder of this year.

Who were the main winners and losers in the revenue ranking tables?

On the service provider side, all three Japanese companies in the top 15 dropped a place thanks to exchange rate movements and the fact that the Japanese market is at odds with many other countries – it does have a distinct seasonal pattern and the second quarter drops off after a peak in the first quarter. This allowed Verizon to take over the number two spot, with AT&T maintaining its leadership position.

Among equipment vendors, the star of the show was South Korea’s LG which continues a sustained growth spurt and moved up two places to number eight in the ranking. It swapped places with Japan’s NEC which dropped two places. Nokia and Cisco stay in the top two slots.

TeleGeography’s GlobalComms products include a regularly updated online database of wireline, wireless and broadband competition, covering over 160 countries and 1,200 operators.

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TeleGeography’s GlobalComms Insight