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LTE infrastructure revenues peak as subscriptions cross 1bn barrier

LTE subscriptions crossed the one billion barrier in the last quarter of 2015, says the GSA, but revenues from 4G equipment have already peaked, according to IHS Technology.

The GSA (Global mobile Suppliers Association) and Ovum said the final tally of LTE subscriptions at the end of last year was 1.068bn, or one in seven of all mobile connections worldwide. Its growth rate has now easily outpaced that of 3G, even though HSPA remains the main data workhorse for many operators, and some countries have not yet embarked on 4G. In the fourth quarter of 2015, LTE gained 156m new connections, 75% more than 3G. However, the LTE total will not overtake the 3G installed base until 2020, believes the GSA. It also noted that GSM subscriptions fell by 141m in the quarter.

For the full year, LTE gained 552.2m subscriptions worldwide, a growth rate of 107% over 2014.

Alan Hadden, VP of research at the GSA, said: “A daily average of almost 1.7m LTE subscriptions were being signed up during Q4 2015 and the rate of LTE subscriptions growth is accelerating.”

The Asia-Pacific region has the lion’s share of LTE subscriptions, with 580m, or 54.3% of the total. By December 2015 China had passed 386m LTE connections, adding almost 84m in the fourth quarter alone. North America was the second largest LTE market with almost 237m, though its share of the world total is down at 22.2%, while Europe accounts for 14.8%.

In the Latin America and Caribbean region, subscriptions more than quadrupled to over 54m, while the Middle East ended 2015 with 32.5m – annual growth of around 110% – and Russia with over 11.7m. There are now 480 operators with commercial LTE networks in 157 countries, and the GSA predicts this will increase to 550 this year.

More than one-third of operators are now investing in LTE-Advanced deployments and upgrades, particularly focusing on the carrier aggregation options. In total, 116 operators, almost a quarter of all LTE operators, have commercially launched LTE-Advanced service in 57 countries.

As subscriptions rise, however, many of the biggest operator network roll-outs are coming to an end, creating a squeeze for equipment vendors, even as the carriers look forward to a capex breathing space in which to monetize their 4G users more profitably.

According to new figures from IHS, the fourth quarter of 2015 saw $13bn worth of macrocell roll-outs, mainly driven by LTE in India and China, but warned that the LTE market has now topped out and will start to decline this year. IHS said it expects the LTE market to decline at a compound annual rate of 13% between 2015 and 2020.

Worldwide macrocell revenues in Q415 were up 3% year-on-year and 11% on the third quarter, while mobile infrastructure software revenues grew by 17% year-on-year, led by LTE-Advanced upgrades. For the full year, the worldwide macrocell infrastructure market totaled $48bn, and quarterly LTE revenue is now $2bn higher than 2G and 3G revenue combined.

“The fast LTE roll-out ramp that occurred in China in Q4 caused LTE revenue to soar 20% sequentially, and 20% from Q4 2014,” wrote Stéphane Téral, IHS’s senior research director of mobile infrastructure. “China has reached the end of its massive LTE roll-outs led by China Unicom and China Telecom; LTE roll-outs in western and central Europe are also very close to completion, and in the Middle East 3G upgrades are complete.”

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