Dell’Oro: Telecom Capex Growth to Slow in calendar years 2022-2024
Dell’Oro Group forecasts that telco capex growth will taper off in 2023 and 2024 after increasing 9% year-over-year in nominal USD terms and on track to advance 3% in 2022.
The market research firm states that the top fifty carriers in the world collectively generated combined annual revenue and investments of well over $1.4 T this past year. They estimate that these carriers account for roughly 80% of worldwide capex and revenue.
Dell’Oro’s Telecom Capex bi-annual reports (previously called Carrier Economics bi-annual reports) track the revenue and capital expenditure (capex) trends for these fifty-plus carriers.
“Telco investments, in general, have shown remarkable resilience to external factors including Covid-19 containment measures, supply chain disruptions, and economic uncertainties,” said Stefan Pongratz, Vice President and analyst with the Dell’Oro Group. “Surging wireless investments in the US taken together with non-mobile capex expansions in China will keep the momentum going in 2022,” continued Pongratz.
Stefan believes carrier revenue and capex trends can to some degree explain telecom equipment manufacturer revenue trends. The highly granular information provided in this report will enable carriers, system and component vendors, equity researchers, and regulatory bodies to assess growth opportunities and to observe performance practices in the telecom sector.
Additional highlights from the March 2022 3-year Telecom Capex forecast report:
- Global capex growth is expected to moderate from 9 percent in 2021 to 3 percent in 2022, before tapering off in 2023 and 2024.
- The coupling between carrier investments and manufacturing infrastructure revenues is expected to prevail over the short-term—capex and telecom equipment are on track to advance 3 percent and 4 percent in 2022, respectively.
- Short-term output acceleration is expected to be relatively broad-based, with investments growing in China and the US. At the same time, challenging comparisons in the US are expected to drag down the overall capex in the outer part of the forecast.
- Following a strong showing in 2021, capex growth prospects across Europe will be more muted in 2022.
MTN Consulting estimates a nearly $325B annualized global capex in 2021, or nearly double the webscale total of $175B. The ratio of capex to revenues, or capital intensity, reached 17.2% in 2021, the highest level since 2015.
Excluding China/HK-based companies (which haven’t finished reporting), the top 10 biggest telco capex spenders in 2021 were AT&T, DT, Verizon, NTT, Comcast, Vodafone, Orange, Charter, America Movil, and Telefonica. The biggest capex gains in 2021 were seen at America Movil (+$2.54B versus 2020 total), Telecom Italia (+$2.49B), Verizon (+$2.09B), AT&T (+$1.93B), Deutsche Telekom (+$1.74B), BT (+$1.63B), and Rakuten ($1.47B). The DT jump is inflated slightly by its Sprint acquisition, which closed in April 2020.
MTN’s latest official global capex forecast is for $328B in 2022, a bit higher than 2021. “We are maintaining this target for now, but there is a high level of uncertainty and considerable downside risk.” No forecast beyond 2022 was provided.
The Dell’Oro Group Telecom Capex Report provides in-depth coverage of more than 50 telecom operators highlighting carrier revenue, capital expenditure, and capital intensity trends. The report provides actual and 3-year forecast details by carrier, by region by country (United States, Canada, China, India, Japan, and South Korea), and by technology (wireless/wireline). To purchase this report, please contact by email at [email protected].
Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications and enterprise networks infrastructure, network security and data center IT markets. Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, please contact Dell’Oro Group at +1.650.622.9400 or visit www.delloro.com.
China is already showing signs of slowing its 5G investment – China Telecom plans to reduce 5G investment by nearly 11% to 34 billion yuan (US$5.34 billion) this year, reported Light Reading’s Robert Clark in March. China Mobile has budgeted 110 billion yuan (US$17.3 billion) for spending on 5G networks in 2022, a 3.5% decline.
In the US, Dish Network is among service providers upping their 5G investments this year. Dish spent $1 billion on 5G-related capex in 2021 and plans to spend $2.5 billion in 2022 , reported Light Reading’s Jeff Baumgartner in February.
On the other hand, IDC doesn’t expect telecom capex to drop until 2024:
“COVID-19 has shown no long-term negative effects on telecommunications capex. IDC expects 2021 capex will grow versus 2020 and show no decline until at least 2024. If anything, COVID-19 has led to communications service providers increasing their network investments to sustain increase demand for connectivity and the speeds associated with it.” said Daryl Schoolar, IDC research director, Worldwide Telecommunications Insights.
Worldwide Telecom Capex Growth to Taper Off in 2023, According to Dell’Oro Group
MTN Consulting: : 4Q2021 review of Telco & Webscale Network Operators Capex