Strong growth continues for North American wireline capex in 2Q06. Mobile capex declines

Ovum-RHK:nalysis of second quarter 2006 revenue and capital spending by North American network operators. Wireline operators increased capital spending by 16 percent versus the second quarter of 2005, following a 22 percent increase in 1Q06. This was despite wireline revenue declines of 5 to 6 percent versus the first half of 2005. Mobile operators reduced capital spending by 18 percent versus last year, despite a revenue increase of 12 percent.

2Q06 highlights for North American network operators:

• Wireline revenues = $43.6 billion, down 5 percent versus 2Q05

• Wireline capex = $7.5 billion, up 16 percent versus 2Q05

• Mobile revenues = $32.8 billion, up 12 percent versus 2Q05

• Mobile capex = $5.3 billion, down 18 percent versus 2Q05.

Wireline capex in North America increased 18 percent in the first half of 2006 compared to last year. However, both AT&T and Verizon again posted lower revenue figures than last year, which suggests continued problems with their legacy long-distance services, and that payoffs for the increased capital spending remain in the future. Wireline capex in North America Publ 20060807