According to a recent report by Dell’Oro Group, telecom operators are now scaling back their investments in 5G and fixed broadband technologies. Of course, that’s nothing new as telco CAPEX has been declining for quite some time (see References below).  Preliminary Dell’Oro findings show that the more challenging conditions that shaped the second half of 2023 extended into the first half of 2024.

Worldwide telecom capex, the sum of wireless and wireline/other telecom carrier investments, declined 10% year-over-year (YoY) in the first half of 2024, partly due to built-up inventory, weaker demand in China, India, and US, challenging 5G comparisons, excess capacity, and elevated uncertainty.

“The high-level message is clear. The flattish revenue trajectory and the difficulties with monetizing new technologies and opportunities are impacting the risk appetite and willingness to raise the capital intensity levels for extended periods,” said Stefan Pongratz, Vice President for RAN and Telecom Capex research at Dell’Oro Group. “In addition, the reduced gap between advanced and less advanced regions, when it comes to adopting new technologies, is impacting the investment intensity on the way up and down,” continued Pongratz.

Additional highlights from the September 2024 Telecom Capex report:

• Global carrier revenues are expected to increase at a 1 percent CAGR over the next 3 years.
• Worldwide telecom capex is projected to decline at a mid-single-digit rate in 2024 and at a negative 2 percent CAGR by 2026.
• The mix between wireless and wireline remains largely unchanged, reflecting challenging times still ahead for wireless. Wireless-related capex will decline at a 3 percent CAGR by 2026.
• Capital intensity ratios are modeled to approach 15 percent by 2026, down from 17 percent in 2023.

In  a previous Dell’Oro report last month, telecom equipment revenues fell by 17% worldwide during the first half of the year. Dell’Oro described that as ‘abysmal results’ and again blamed excess inventory, weaker demand in China, ‘challenging 5G comparisons’, and elevated uncertainty.

About the Report

The Dell’Oro Group Telecom Capex Report provides in-depth coverage of around 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].

References:

Telecom Capex Down 10 Percent in 1H24, According to Dell’Oro Group

Dell’Oro: Abysmal revenue results continue: Ethernet Campus Switch and Worldwide Telecom Equipment + Telco Convergence Moves to Counter Cable Broadband

Analysts: Telco CAPEX crash looks to continue: mobile core network, RAN, and optical all expected to decline

Analysys Mason’s gloomy CAPEX forecast: “there will not be a cyclical recovery”

China Mobile & China Unicom increase revenues and profits in 2023, but will slash CAPEX in 2024

Dell’Oro: RAN market still declining with Huawei, Ericsson, Nokia, ZTE and Samsung top vendors

Highlights of Dell’Oro’s 5-year RAN forecast

Dell’Oro: 2023 global telecom equipment revenues declined 5% YoY; Huawei increases its #1 position

Dell’Oro & Omdia: Global RAN market declined in 2023 and again in 2024

Global 5G Market Snapshot; Dell’Oro and GSA Updates on 5G SA networks and devices