According to a report from Dell’Oro Group, telecom operators are now scaling back their investments in 5G.
Preliminary findings show that worldwide telecom CapEx, the sum of wireless and wireline/other telecom carrier investments, declined for the full year 2023 in nominal USD terms, recording the first contraction since 2017.
“The fundamental challenges have not changed. Operators have a fixed capital intensity budget and CapEx is largely constrained by the revenue trajectory,” said Stefan Pongratz, Vice President and analyst with Dell’Oro Group.
“What is complicating the situation is that the revenue pie remains fixed. Following some positive developments amidst the peak of the COVID-19 pandemic, our analysis shows that operator revenue growth slowed in 2023 and has more or less remained stagnant over the past decade. And based on the guidance, operators, in general, are not overly optimistic that emerging opportunities with generative AI, edge computing, enterprise 5G, FWA, and 5G-Advanced will expand the pie,” continued Pongratz.
Dell'Oro points out that this deceleration in the broader capex spend is consistent with the aggregate telco equipment slump previously communicated by the firm.