Worldwide telecom capex—the sum of wireless and wireline telecom carrier investments—increased at a low-single digit rate year-over-year in nominal USD terms in 2022, down from the high-single digit growth in 2021, according to a new forecast report from Dell'Oro Group. This moderation in the capex growth rate was consistent with the aggregate telco equipment trends previously communicated regarding the six Dell'Oro telecom programs (Broadband Access, Microwave Transmission & Mobile Backhaul, Optical Transport, Mobile Core Network, Radio Access Network, Service Provider Routers & Switch).
"The relation between service provider capex and telecom equipment is not perfect, partly because the equipment makes up roughly one third of the capex," said Stefan Pongratz, Vice President and analyst with Dell'Oro Group. "Even with the inherent wiggle room, aggregate R-squared for capex and equipment is in the 0.8+ range over the past seven years, so it is obviously an important metric to consider for short-term projections. At the same time, it is not the only input and with the equipment market expected to grow 1 percent in 2023 and telco capex projected to decline, it can be inferred that the Dell'Oro analyst team is modeling some minor decoupling over the short-term," continued Pongratz.
Additional highlights from the March 2023 3-year Telecom Capex forecast report:
- Looking back at the full year, total capex growth was slightly lower than the 3 percent increase we initially projected a year ago going into 2022, partly due to the stronger USD.
- Global telecom capex projections have been revised upward to reflect the price of the USD and the improved capex outlook in China.
- Global telecom capex is projected to decline at a 2 percent to 3 percent CAGR over the next 3 years, as positive growth in India will not be enough to offset sharp capex cuts in North America.
- Capital intensity ratios are projected to improve and approach 16 percent by 2025, hinging crucially on the assumption that carrier revenues will remain flat and outperform capex.
https://www.delloro.com/news/worldwide-telecom-capex-to-decline-in-2023/
