Dell’Oro highlighted that global carrier revenues are expected to increase at a 1% CAGR over the next three years
Worldwide telecom capex experienced a decline in 2023 in nominal terms as telecom operators are scaling back their investments in the 5G field, according to a new report from Dell’Oro Group.
The report noted that the sum of wireless and wireline and other telecom carrier investments recorded last year the first contraction since 2017.
“The fundamental challenges have not changed. Operators have a fixed capital intensity budget and capex is largely constrained by the revenue trajectory,” said Stefan Pongratz, vice president and analyst with Dell’Oro Group. “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,” Pongratz added.
Dell’Oro highlighted that global carrier revenues are expected to increase at a 1% CAGR over the next three years.
The Dell’Oro report also stated that market conditions are expected to remain challenging in 2024, as worldwide telecom capex is now projected to decline at a mid-single-digit rate in 2024 and at a negative 2 to 3% CAGR by 2026.
The report also explained that the mix between wireless and wireline remains largely unchanged, reflecting challenging times still ahead for wireless operations. Wireless related capex is on track to decline at a double-digit rate in the U.S. in 2024, according to Dell’Oro.
“5G era capital intensity ratios peaked in 2022 and are on track to approach 15% by 2026, down from 18% in 2022,” the report stated.
In a previous report, Dell’Oro stated that the Mobile Core Network (MCN) market growth rate has been reduced to less than a 1% CAGR during the 2023-2028 period, adding that growth in this market will be led by the Multi-access Edge Computing (MEC) market segment and the 5G MCN market segment.
“This is the fourth consecutive time we reduced the growth rate of the MCN market as the build-out of 5G Standalone (5G SA) networks continues to wane compared to 5G Non-standalone (5G NSA) networks,” said Dave Bolan, research director at Dell’Oro Group. “The buildout of 5G SA networks is going slower than anticipated which is restraining growth in the marketplace. To date, we count fifty 5G SA eMBB networks that have been commercially deployed worldwide by mobile network operators. We counted 18 new 5G SA networks in 2022, but only 12 were launched in 2023. On a positive note, we believe a lot of work has been done in the background, preparing for 5G SA launches by mobile operators and we expect 2024 to have more launches than 2022.”
