Service providers, which stockpiled network equipment following the supply chain issues caused by the COVID-19 pandemic, scaled back their wireless and wireline investments in 2024.
A new Dell’Oro report revealed that the high-level relationship between carrier revenues, capex, and telecom equipment mainly was stable, as telecom capex and telecom equipment revenues tanked in 2024.
The research firm’s preliminary findings show that worldwide telecom capex, the sum of wireless and wireline/other telecom carrier investments, declined 8 percent in 2024. Specifically, telecom equipment manufacturing revenues for the six programs Dell’Oro tracks declined 11 percent over the same period.
Differing risk profiles
Dell'Oro noted that service providers have developed unique approaches to capital allocation for fiber and 5G wireless builds.
“With some of the larger fiber and 5G builds now in the past, the different risk profiles across the carrier spectrum become more pronounced,” said Stefan Pongratz, VP of RAN and telecom capex research at Dell’Oro Group.
He added that while “some operators prefer a more growth-oriented approach and consider elevated capital intensity levels as essential to gain a competitive edge and be better prepared for the next technology transition, the majority of the operators believe the pie is mostly fixed and focusing on efficiency improvements is considered less risky to this group.”
Near and long-term realities
Dell’Oro forecasts several near and long-term realities facing telecom capex patterns.
The research firm expects investment conditions to stabilize in 2025, though it will still be a challenging year from a capex and telecom equipment revenue perspective.
However, it cautioned that the near-term investment outlook is less favorable: carrier capex will decline at a 2 percent CAGR over the next three years.
Looking beyond 2025, carrier revenues are on track to advance slightly (+1 percent CAGR), capex/revenue is projected to approach 14 percent in 2027, down from 16 percent in 2024.
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Sean Buckley
Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.