(EMAILWIRE.COM, September 16, 2003 ) CEDAR KNOLLS, NJ -- As the competitive outlook for the telecom market is becoming more stable and the rate of innovation is decreasing, the forecast for capitalized spending (capex) is moderately encouraging, according to Probe Group. However, Probe suggests that the nature of that "spend" will be very different from that of the "good old days."

"Certainly, many telcos are laboring under massive debt burdens and price erosions that may yet be their undoing, but taken as a whole we do expect the industry to begin to spend again," commented Probe vice president Richard Endersby.

In the 1990s, there was a capex boom and bust. A combination of rapid deregulation, availability of capital and swift technological innovation led to a quick influx of capital. Telecommunications - characterized by large up-front investment costs with very low incremental costs - has tended towards pricing levels that are very low, leaving little, if any, room for profit. This, in addition to the bloated expectations of Wall Street analysts, led to a rise in interest costs as telcos' debt ratings fell.

However, Endersby feels that the now "restructured" competitive environment is better positioned to return to a free cash flow situation, which is conducive to capex spending. He suggests that investment will be targeted at growth sectors, particularly wireless and packet. MPLS will be a key technology as carriers seek to migrate their ATM and Frame Relay traffic onto a single IP network. Just as much as technology solutions matter, so does the back-office and after-sales support. "Vendors that do this well will prosper. Those that don't will inevitably fail-and probably deservedly so," said Endersby.

Probe's recent report, "Telecom Capital Expenditure Trends," analyzes the recent trends in capex for the telecommunications industry. It discusses the recent past and forecasts future telecom capital expenditures, including its driving forces. This report is part of the Global Internet Infrastructure Markets service, which provides ongoing quantitative and competitive analysis of the Internet infrastructure market and its technology and vendors. Developments in technology, MPLS, high-speed core, service and access issues are considered from both the vendor and carrier perspective. Forecasts and assessments are global in nature, with regional and country analysis presented where appropriate.

About Probe Group LLC
For over 26 years, Probe has leveraged its unique insights and extensive experience in both the traditional world of telecommunications and the burgeoning world of data and packet networks to offer clients sound counsel and realistic market forecasts. Probe has successfully maneuvered clients through changes in demand, demographic shifts, introduction and evolution of new technologies and platforms, industry structure transformations and financial market volatility. Probe provides clients with expert guidance through continuous research services, consulting projects, retainer programs and a variety of other direct analyst-access services. - # -

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To obtain more information on the report, "Telecom Capital Expenditure Trends" (GIIM, Vol. 5, No. 4), the Global Internet Infrastructure Markets service, or to arrange an analyst interview, contact Karen Verrinder or visit Probe on the web at www.probegrp.com.

Contact:
Karen Verrinder
Public Relations Manager
Tel. 973.285.1500, ext. 227
E-mail: mailto:kverrind@probegrp.com

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