According to a recently published report from Dell’Oro Group, preliminary readings indicate that worldwide telecom capex, the sum of wireless and wireline telecom carrier investments, 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. Worldwide telecom capex is projected to drop 7% by 2025, relative to 2022 levels.

“The forces that shape the capex cycle have not changed,” said Stefan Pongratz, vice president of the Dell’Oro Group. “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. 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,” continued Pongratz.

Additional highlights from the September 2023 Three-year Telecom Capex forecast report:

The broader telecom outlook is mostly unchanged. Global telecom capex is projected to decline at a 2% compound annual growth rate 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 U.S., the transition towards steady-state conditions will weigh on wireless activity, leading to a 25% to 30% reduction over the next three years.

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.

About the Report

The Dell’Oro Group Telecom Capex Report provides in-depth coverage of more than 50 telecom operators highlighting carrier revenue, capital expenditure and capital intensity trends.  The report provides actual and three-year forecast details by carrier, by region by country (U.S., Canada, China, India, Japan and South Korea) and by technology (wireless/wireline).