Globally, the telecom sector capex (capital expenditure) declined in 2023, as the telcos scaled down the 5G rollout. According to a Dell'Oro Group report, for the first time since 2017, the capex for the global telecom sector has gone down in the full year 2023 in nominal USD terms. Telcos are not finding any incremental revenues with respect to rolling out 5G at an aggressive pace anymore. While developing countries still have to roll out 5G, in developed nations such as China and the USA, 5G is a common sight.
So telcos in such countries are not going to spend as much money on 5G equipment as most of their 5G rollout is complete. In the case of developing countries, looking at the global scenario, the telcos will make calculated decisions as spending money on immediately rolling out 5G isn't best for the overall revenues.
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Stefan Pongratz, Vice President and analyst with the Dell'Oro Group said, "The fundamental challenges have not changed. Operators have a fixed capital intensity budget and capex is largely constrained by the revenue trajectory."
"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," added Pongratz.
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The report said that the global carrier revenues are expected to grow by 1% CAGR over the next 3 years. Further, worldwide telecom capex is going to reduce at a single-digit rate in 2024 and a negative 2 to 3% CAGR by 2026.
