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Published on 2024-03-21 03:03:38
A recent report has shown that there was a five per cent decrease in network investments by global telecommunications operators in 2023, indicating a potential further decrease in capital expenditure for the upcoming year. The research conducted by Dell’Oro Group revealed that spending on network technology products had decreased by five per cent compared to the previous year, marking the first decline after five consecutive years of increasing investments. While an exact value for the market was not provided, previous insights estimated that global spending across various telecom networking technology categories was around $100 billion in 2022, suggesting a total of $95 billion in 2023.
The reduced spending was attributed to several factors, including the accumulation of network technology inventories by operators and supply chain issues. Particularly, investments in the radio access network (RAN) and mobile core system sectors experienced a decline. However, it was not only mobile network investments that were affected, as noted by Dell’Oro Vice President and Analyst, Stefan Pongratz.
Despite a decline in investments, there were positive developments in other areas such as optical transport and service provider routers. The report highlighted major capital expenditure cuts by top U.S. telcos, significantly impacting the North American market. While there was a decline in activity in RAN and broadband access, the market dynamics were more favorable outside of the U.S., with positive growth observed in the Asia Pacific region.
Vendor rankings remained relatively consistent, with Chinese company Huawei Technologies holding the largest global market share at 30 per cent, followed by Nokia and Ericsson at 15 per cent and 13 per cent, respectively. The top seven vendors accounted for 80 per cent of the global market share, according to Dell’Oro’s calculations.
Financial reports from vendors throughout 2023 reflected the tightening of purse strings by network operators, with major vendors like Ericsson and Nokia reporting significant year-on-year sales declines. Additionally, they highlighted a challenging economic environment for the telecom industry in 2024.
Overall, the report indicates a shift in network investments by global telecommunications operators, with a focus on cost reduction and careful spending in the face of market challenges. As the industry continues to evolve, vendors and operators will need to adapt to changing dynamics and prioritize investments that drive growth and innovation in the telecoms network equipment market.
