Not Exactly Gazelle-Like Growth
According to a recently published report from Dell’Oro Group, preliminary readings suggest that 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. 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% 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.
Looking back at the full year, total CapEx growth was slightly lower than the 3% increase initially projected a year ago going into 2022, partly due to the stronger USD.
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 3-year forecast details by carrier, by region by country (United States, Canada, China, India, Japan, and South Korea), and by technology (wireless/wireline).
DELL’ORO GROUP
Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, security, enterprise networks, security, and data center infrastructure markets. The firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, please contact Dell’Oro Group at +1.650.622.9400 or visit www.delloro.com.