The latest analysis from MTN Consulting has revealed the trends in terms of Capital spending (Capex) and revenue of telecom operators in April-June quarter of 2024.
Capex Trends
Capex of telecommunications network operators showed a significant downward trend in the second quarter of 2024compared to the previous year. Key findings include:
Global Capex Decline: In Q2 2024, Capex fell by 8.0 percent to $69.4 billion. This is a substantial decline from the previous year, highlighting a tightening of investment across many regions. Capex dropped by 6.9 percent year-over-year for the annualized period ending Q2 2024, amounting to $300.7 billion.
Top Performers in Capex Growth: Despite the overall downward trend, certain telcos bucked the trend and reported significant capex growth:
BSNL (India) saw 128.2 percent increase, signaling a strong investment focus, potentially on network expansion or modernization.
KDDI (Japan) recorded a 23.6 percent rise, making it a key player in the APAC region.
Telecom Italia (+9.1 percent), Charter Communications (+7.9 percent), and America Movil (+7.6 percent) also contributed to the positive capex growth in their respective regions.
Worst Performers in Capex Decline: The worst capex contractions came from:
Verizon (USA), with 26 percent drop.
Reliance Jio (India) saw a reduction of 22.6 percent, marking a substantial shift in one of the world’s fastest-growing telecom markets.
Deutsche Telekom (–20.6 percent), Vodafone (–14.6 percent), and AT&T (–13.1 percent) also saw double-digit declines.
Regional Insights
Asia Outspending Americas: While the Americas reclaimed its position as the largest region by revenue, Asia outpaced the Americas in capex, representing 36.5 percent of total capex spending in the latest quarter. This reflects strong ongoing investments in 5G infrastructure, digital transformation, and network upgrades across Asia.
Europe Leads in Capital Intensity: Europe exhibited the highest capital intensity, reaching 18.4 percent in Q2 2024, followed by the Middle East and Africa (MEA) at 17.4 percent. This suggests that European telcos continue to allocate a higher percentage of revenues to capital projects compared to other regions.
Key Takeaways
The global capex decline indicates a cautious approach to investment, likely influenced by factors such as economic conditions, evolving market needs, and strategic refocusing by telcos.
Selective regional investments and significant capex boosts from companies like BSNL and KDDI reflect growth in specific markets, particularly in Asia and parts of Europe, while US-based telcos like Verizon and AT&T are scaling back.
Trends in Operators’ Revenue
Revenue of telecom operators during Q2 2024 dropped 1.4 percent to $437.8 billion, showcasing stagnation and pressure in the market.
Top Performers
America Movil: 8 percent
STC (Saudi Telecom): 5.8 percent
BT: 4.7 percent
Telefonica: 3.6 percent
Orange: 2.9 percent
Underperformers
NTT: –5.7 percent
KDDI: –5.4 percent
SoftBank: –4.7 percent
Vodafone: –1.7 percent
China Unicom: –1.6 percent
Regional Revenue Trends:
Americas: Reclaimed its position as the largest revenue-generating region, with a 37.3 percent share of global telecom revenue in 2Q24.
Asia has outpaced the Americas in terms of capex spending, holding a 36.5 percent share in 2Q24.
Europe has retained the highest capital intensity (18.4 percent), followed by the Middle East and Africa (MEA) at 17.4 percent, signaling strong infrastructure investments in these regions.
The telecom industry is facing slowing revenue growth with stagnation. Regional variances suggest the Americas and Asia are key battlegrounds for revenue and capex leadership, while Europe focuses heavily on capital intensity.
Baburajan Kizhakedath
