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Research: Telecom capex declined in 2023

April 3, 2024

According to findings from research firm Dell’Oro Group, telecom operators are now scaling back their investments in 5G. Preliminary data show that 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 is consistent with the aggregate telco equipment slump previously communicated for the six Dell’Oro telecom programmes (Broadband Access, Microwave Transmission & Mobile Backhaul, Optical Transport, Mobile Core Network, Radio Access Network, Service Provider Routers & Switch).

“The fundamental challenges have not changed,” says Stefan Pongratz, Vice President and analyst with Dell’Oro Group. “Operators have a fixed capital intensity budget and capex is largely constrained by the revenue trajectory. 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.”

Additional highlights from the March 2024 Telecom Capex report:

  •  Global carrier revenues are expected to increase at a 1 per cent CAGR over the next three years.
  •  Market conditions are expected to remain challenging in 2024. Worldwide capex is now projected to decline at a mid-single-digit rate in 2024 and at a negative 2 to 3 per cent 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 per cent by 2026, down from 18 per cent in 2022.

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