Telecom capital expenditures (Capex) dropped by 10 percent in the first half of 2024, as operators scaled back investments in 5G and fixed broadband technologies, according to a report from Dell’Oro Group.
This marks a continued trend of cautious spending, with global telecom Capex projected to fall at a mid-single-digit rate through 2024. By 2026, telecom Capex is expected to see a negative compound annual growth rate (CAGR) of 2 percent, reflecting ongoing challenges in the industry.
Despite the downturn in Capex, global carrier revenues are anticipated to grow at 1 percent CAGR over the next three years. The balance between wireless and wireline investments remains relatively unchanged, although wireless Capex is expected to decline at a 3 percent CAGR by 2026, indicating tough times ahead for wireless infrastructure spending, Dell’Oro Group said.
Key Capex Developments in 2024
MTN Consulting’s data reveals a decrease in revenues for network infrastructure (NI) vendors, with a 3.4 percent year-over-year drop in Q2 2024. The annualized revenue for the period stood at $205.7 billion, marking an 8.9 percent decline year-over-year.
Notably, excluding Huawei, the market saw a sharper decline of 7.3 percent in the latest quarter and 11.2 percent in annualized Q2 2024. However, Huawei showed signs of recovery, improving its performance after several challenging quarters.
Top three telecom infrastructure vendors — Huawei, Ericsson, and Nokia — accounted for 37.7 percent of the market in annualized Q2 2024, with China Comservice and ZTE vying for the fourth and fifth spots.
Global and Regional Capex Trends
MTN Consulting forecasts that global telecom Capex, a critical driver of the Telco NI market, will decline from $315 billion in 2023 to a range between $295 billion and $305 billion. However, a recovery is expected, with Capex rising to $331 billion by 2028. In the short term, the US market presents a more optimistic outlook due to government funding from programs like BEAD and RDOF.
Several telecom giants have announced significant investments in specific areas. SoftBank, for instance, increased its Capex by ¥63.8 billion to ¥203.4 billion in the three months ending June 30, focusing primarily on AI computing platforms and network quality improvements. SoftBank is expected to invest approximately 150 billion yen in expanding AI computing infrastructure across multiple domestic sites.
Airtel India’s Capex for Q2 2024 amounted to Rs 6,781 crore, with the company adding 6,300 towers and 15,500 mobile broadband stations to enhance network connectivity.
Airtel Africa’s Capex reached Rs 1,225 crore in the same period.
China Mobile spent RMB 64 billion on Capex, equivalent to 13.8 percent of its telecom service revenue, primarily focused on expanding its 5G network, which now serves 514 million users and operates over 2.29 million base stations.
Sunrise invested CHF 126.4 million in network expansion in Switzerland, representing 17.1 percent of its Q2 2024 revenue. The company is doubling its internet speed on its hybrid fiber-optic cable network from 1 Gbps to 2.5 Gbps.
MTS, which has 81 million subscribers in Russia, plans to make significant investments in R&D in the coming years, which will enable MTS to maintain and strengthen its technological leadership in Russia.
The capital intensity ratio, a key metric of investment efficiency, is expected to decline to 15 percent by 2026, down from 17 percent in 2023, signaling a trend toward more cautious and targeted investments across the telecom sector.
Baburajan Kizhakedath
