Telecom capex falling

Worldwide telecom capex, the sum of wireless and wireline/other telecom carrier investments, declined for the full year 2023 in nominal USD terms, recording the first contraction since 2017.

This deceleration in the broader capex spend Telecom capex fallingisconsistent with the aggregate telco equipment slump previously communicated for the six Dell’Oro telecom programs (Broadband Access, Microwave Transmission & Mobile Backhaul, Optical Transport, Mobile Core Network, Radio Access Network, Service Provider Routers & Switch).

“The fundamental challenges have not changed. Operators have a fixed capital intensity budget and capex is largely constrained by the revenue trajectory,” says Dell’Oro vp Stefan Pongratz, “what is complicating the situation is that the revenue pie remains fixed. Following some positive developments amidst the peak of the Covid-19 pandemic, our analysis shows that operator revenue growth slowed in 2023 and has more or less remained stagnant over the past decade. And based on the guidance, operators, in general, are not overly optimistic that emerging opportunities with generative AI, edge computing, enterprise 5G, FWA, and 5G-Advanced will expand the pie.”


Global carrier revenues are expected to increase at a 1 percent CAGR over the next 3 years.

Market conditions are expected to remain challenging in 2024. Worldwide telecom capex is now projected to decline at a mid-single-digit rate in 2024 and at a negative 2 to 3 percent CAGR by 2026.

The mix between wireless and wireline remains largely unchanged, reflecting challenging times still ahead for wireless. Wireless related capex is on track to decline at a double-digit rate in the US in 2024.

5G era capital intensity ratios peaked in 2022 and are on track to approach 15 percent by 2026, down from 18 percent in 2022.

Source

      Guidantech
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