Telco spending on radio access network (RAN) infrastructure, which is the largest share of capex, has dropped sharply in the last couple of years. It fell 11% in 2023, to about $40 billion, according to Informa owned market research firm Omdia (see References below for Dell’Oro’s numbers).

For 2024, Omdia predicts another decline of between 7% and 9%.  Instead of buying new equipment, telcos have used existing supplies in their where houses.

Traffic growth rates also appear to have slowed. The graphic used in Ericsson’s latest mobility report pictures this very clearly, showing a church steeple of a traffic spike in 2019 and 2020 before a shallower downward-sloping gradient to the first half of 2024.  That’s shown in this chart:

Source:  Ericsson

Ericsson’s latest numbers, available through its mobility visualizer tool, shows the monthly volume of global mobile data rose by just 4.34% in the second quarter of 2024, compared with the first quarter. This is much lower than the rate of 10.76% Ericsson observed in the corresponding quarter four years earlier. The actual increase in 2024 was 6.27 exabytes. In 2020, it was 4.86 exabytes.

RAN product revenues have been falling at their sharpest rate in many years despite the 6.27-exabyte increase in monthly data volumes that happened in the second quarter. There are no signs that current 4G and 5G networks are about to keel over beneath an avalanche of data.  It remains to be seen whether mobile networks are sufficiently robust to cope with many more exabytes of mobile data traffic or if telcos care about any service problems caused by congestion due to increased traffic.  

There is also no obvious correlation between traffic growth and expenditure, according to Coleago Consulting. Spain’s Telefónica supported 17,054 petabytes of data on its global networks in 2015, its annual reports show. By 2023, the amount had rocketed to 146,074. Yet its capital intensity has fallen from more than 17% to just 14% over this period. Energy use, a proxy for operating costs, is also down, dropping from about 6,578 gigawatt hours in 2015 to 6,012 last year. Despite all that data consumption by its customers, Elisa’s capital intensity last year was less than 15%.

In Germany, the average monthly data usage per mobile customer (rather than per capita) amounted to 7.4 Gbytes and this may have risen to around 8 Gbytes in 1H 2024. In 2024, mobile data consumption in Finland was around 10 times higher compared to Germany.  In Finland mobile operators have implemented 5G-SA and sell a user experience in terms of speed (Mbits/s) as opposed to data volume (Gbytes). As of October 2024, Elisa Finland offered a speed of 300 Mbits/s with unlimited data volume for €34.99. By contrast, in Germany, Telekom’s offer for 20 Gbytes is priced at €39.95 per month. For unlimited data usage Telekom charges €84.95, which is 2.5 times more costly than Elisa’s unlimited offer. It is unreasonable to assume that there is no price elasticity of demand. Surely, if prices in Germany were like those in Finland, monthly mobile data usage per customer would be much higher.

Monthly average revenue per user (ARPU) for a postpaid customer of Deutsche Telekom, Germany’s biggest telco, has fallen from €22 (US$23.7) before the launch of 5G to about €20 ($21.6) for the most recent quarter.  Clearly, cost realities are especially awkward for Europe’s telcos, which have refused to give up their “fair share” argument that big content companies should pay for network usage because of all the traffic they supposedly generate. Critics disagree, saying that the telco’s own customers are the traffic generators, and they have already paid for it, even if pricing schemes do not help telcos to grow their sales.

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References:

https://www.lightreading.com/5g/data-traffic-growth-or-decline-there-s-no-upside-for-telecom

https://www.ericsson.com/en/reports-and-papers/mobility-report/mobility-visualizer?f=1&ft=2&r=2,3,4,5,6,7,8,9&t=1,2,3,4,5,6,7&s=4&u=1&y=2023,2029&c=3

https://www.coleago.com/insights/the-end-of-telecoms-history-not-really/

Analysys Mason & Light Reading: cellular data traffic growth rates are decreasing

Dell’Oro: Global RAN Market to Drop 21% between 2021 and 2029

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

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

Dell’Oro: RAN market declines at very fast pace while Mobile Core Network returns to growth in Q2-2023

China’s mobile data consumption slumps; Apple’s market share shrinks-no longer among top 5 vendors

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

Ookla: T-Mobile and Verizon lead in U.S. 5G FWA