Worldwide telecom CapEx to drop 7% by 2025, says Dell’Oro Group
Thu 5 Oct 2023
Worldwide telecom CapEx, the sum of wireless and wireline telecom carrier investments, will drop 7% by 2025. Dell’Oro Group said this is relative to 2022 levels.
The report by Dell’Oro found that telecom CapEx experienced a slowdown in growth during the first half of 2023 after a couple of years of favorable developments.
This moderation was not a surprise and reflects the anticipated pullback in especially wireless related investments, consistent with the findings in the total telecom equipment reports.
Looking ahead, conditions are expected to remain challenging in 2024 before stabilizing in 2025.
“The forces that shape the CapEx cycle have not changed. Operators can raise capital intensities over the short-term, but there is a reason the trend line has stayed flat over the past 10+ years,” said Stefan Pongratz, Vice President of Dell’Oro Group.
The broader telecom outlook is mostly unchanged. Global telecom CapEx is projected to decline at a 2% percent over the next three years, as positive growth in India and stable trends in Europe will not be enough to offset steeper CapEx deceleration in North America.
In the US, the transition towards steady-state conditions will weigh on wireless activity, leading to a 25% to 30% reduction over the next three years.
“Since we are now operating at elevated ratios, CapEx acceleration remains a transitory phenomenon in a world where neither 4G nor 5G has been able to change the revenue trajectory,” added Pongratz.
Given the highly unlikely prospect of a change in the current revenue trajectory and the expectation of flat operator top-line growth, capital intensity ratios are on track to approach 16% by 2025, slightly below the current trendline.
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