MTN Consulting is focused on network operators & their technology supply chains, tracking the economics of the network operator business and assessing the big shifts that impact technology spending trends. Our coverage includes:

3 major network operator markets

  • Telecom Network Operator (TNO)
  • Webscale Network Operator (WNO)
  • Carrier-Neutral Network Operator (CNNO)

190+ operators

Across the three major network operator markets in all key regions

40+ time series

10+ years’ market- and operator-wise data across quarters and years starting 2011

~50 reports published per year

  • Market data and insight reports spanning –
  • quarterly market reviews
  • operator and vendor deep dives
  • benchmarking and strategic assessments
  • forecast/outlook analysis
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Latest report

Network Operator Forecast Through 2026

Global economies have recovered from the worst of last year’s pandemic, but COVID-19 has caused some long-term shifts in market dynamics. Network traffic growth rates have accelerated, new business models emerged, cloud services matured and spread to new verticals, applications and customer sizes. Networks are more important than ever. Revenue growth rates and profitability in all three segments that we track – telco, webscale, and carrier-neutral – have been stronger in recent quarters than anticipated. Network investments have grown, at sometimes stunning rates. Total network operator capex, across the three segments, is likely to total US$520 billion (B) in 2021, up 13.4% from 2020. Much of this year’s growth came from webscale, which will end 2021 at about 32.1% of total capex, from 29.3% in 2020. But telco and carrier-neutral capex have also spiked. Looking ahead to 2026, capex growth rates will slow considerably but total capex is likely to reach $629B by 2026. In that year, telco, webscale, and carrier-neutral segments will account for roughly 51%, 40%, and 9% of capex, respectively. Networks will increasingly revolve around data centers, which will continue to proliferate both at the core and edge. Data center innovation will continue to be rapid, as webscalers push the envelope on network design and function, and telcos seek cheaper ways of running their networks. The telco need for cost efficiency will rise as overhyped 5G-based opportunities fail to materialize in any big way. Carrier-neutral operators (CNNOs) will remain important to telcos and webscalers, and benefit from an ongoing wave of new capital which will help them transform to more integrated providers of “digital infrastructure” assets. Network operator interdependence MTN Consulting’s Global Network Infrastructure (GNI) service tracks the economics of telcos, webscalers, and carrier-neutral operators. The three groups are not homogenous. Webscale revenue models revolve around a diverse mix of advertising, devices, software, cloud services, and ecommerce. Carrier-neutral providers rent network infrastructure to other businesses. Telcos sell subscription and pay-as-you-go services for communications services, including bandwidth, video, mobility, and enterprise services. There is a huge amount of variety in these discrete market segments. What’s more important, though, is that the three segments rely on each other in important ways. Carrier-neutral players get most of their revenues from telcos & webscalers needing to fill gaps in network coverage. Telcos rely on CNNOs to lower their cost of operations, and need webscalers to provide services and apps which make their network worth using beyond telephony. Webscalers lack last mile access networks, and can only deliver their services to the mass market over telco infrastructure. Webscalers also, despite big capex outlays, can only blanket the globe with data centers by partnering with CNNOs for collocation. Looking ahead, this interdependence will grow. The big cloud providers in the webscale market, for instance, have targeted the telecom vertical and found success; AWS, Azure and GCP recorded about $2B in revenues from telcos over the last 4 quarters. Telcos are making some big bets on cloud technology as they deploy 5G core networks. Both telcos and webscalers want to provide seamless, resilient network coverage, including at the edge, and can’t build it all themselves. As a result, they’ll need to scale up their partnerships with carrier-neutral players like Equinix and American Tower/CoreSite. CNNOs are increasingly taking over the “dumb pipe” aspects of the network, and to be competitive and upsell they will integrate assets across fiber, cell tower and data center. Telco revenues will grow just a bit; capital intensity to fall after 2023, towards 15% range From an unusually weak 2020 base, telco revenues are likely to grow nearly 7% in 2021 to $1,912 billion, but growth thereafter will return to the more typical 1-3% range per year range. By 2026, telco revenues are likely to measure $2.1 trillion. Telco capex is also rising in 2021, up about 8% to $317B, and will hover around $330B for the next three years until falling to $320B by 2026. Drivers for investment in the near term include: expanding 5G RAN coverage; infrastructure for new 5G-based services; replacing Huawei gear; government subsidies of fiber deployment (US and Europe, mainly); 5G stand-alone core projects; transmission and IP-layer (e.g. intent-based routing) upgrades; network automation; and a broad range of software investments, including projects done in collaboration with webscalers (which do impact capex, thanks in part to flexible accounting rules). Software will rise from about 15% of capex last year to 20% by 2026. The main constraint on telco investment is limited prospects for top-line growth. Telcos will remain in a constant battle with their cost structure, seeking to deploy technologies which help lower cost per bit, lower energy costs, lower the cost of running networks. Telco collaborations with webscalers on service creation and delivery, and network offload, will also help on the cost side, as will reliance on CNNOs for key network assets. Regionally, the strongest capex growth rates (from a 2020 base) will be seen in India and MEA. India has all of its 5G deployment ahead of it. MEA includes markets with very underdeveloped fixed network infrastructure, and increased data center & subsea investment underway should help spur this along. The telecom industry will continue to shrink headcount, dropping employees from 5.09M in 2019, to 4.77M this year, and further to 4.44M by 2026. The average employee will cost more, though, as the skillsets required to build and run tomorrow’s networks are far different and also pricier. Telco labor cost per employee was US$53.1K in 2019, $54.5K in 2020, about $58K in 2021, and will rise further to $77K by 2026. As a result, the share of operating expenses (opex) (excluding depreciation & amortization) devoted to labor costs will also rise, up from 22% this year to 24% in 2026. Webscale capex likely to pass $250B by 2026 as revenues approach $3.5 trillion The webscale sector saw incredible growth rates in 2021 on the back of changes wrought by COVID: cloud services adoption, ecommerce spreading far and wide, and a strong digital ad market. Adoption of 5G devices has also helped one key webscaler, Apple. As a result, total webscale revenues exploded from $1.71T in 2020 to about $2.14T in 2021. Growth will slow but the sector will continue to leverage its scale and cash to push into new markets, with 2026 revenues likely to reach about $3.46T. Capex also spiked in 2021, likely to end the year at about $167B (2020: $134B), and will hit about $253B by 2026 even with significant slowdown in growth. About 45% of the 2026 capex budget will for Network, IT and software investments, from about 41% in 2021 when ecommerce-related investments were relatively important. While webscalers have different business models, they all need massive data center-centric networks to support their operations. Webscalers continue to build out huge facilities at the core, across the globe, and also building out network edges to improve resiliency, latency and coverage. They’re also investing heavily in new technologies for their data centers, to economically support their growth and deliver new services and network functions. US-based webscalers have been doing this for many years, and Facebook announced a big new capex push for 2022 recently aimed at implementing more AI/ML capabilities in its facilities, to support “ranking and recommendations for experiences across” its products. Increasingly the Chinese players are getting in the self-design game. At Alibaba’s recent Apsara conference, for instance, the company unveiled several new proprietary products, including the Yitian 710 server chip, the X-Dragon architecture, the Panjiu cloud-native server series, Alibaba AI and big data platform and a new generation of PolarDB database. Carrier-neutral the smallest market but plays key role, will grow capex share to 9% by 2026 As we discussed in a mid-2021 report, the carrier-neutral sector is currently seeing a transformation driven by the desire to integrate multiple types of assets under one roof. That includes companies acquiring across traditional asset boundaries, such as the recent American Tower-CoreSite acquisition, and the investments by private equity firms to invest across asset classes. There will be bumps in the road as a new breed of CNNOs emerge, but they are likely to play even more important roles in the network infrastructure market within 2-3 years. Their integrated offerings will prove attractive to both telcos and webscalers, for financial and operational reasons, and allow them to focus more on their core businesses. The CNNO segment is the smallest we cover, but its revenues will more than double between the 2020 base of $76 billion to reach roughly $155B by 2026. Their capex will come close to doubling, up from $29B in 2020 (6.4% of the combined telco/webscale/CNNO total) to about $56B in 2026 (8.9% of total). Much of the CNNOs' capex is devoted to real estate and low-tech investments, but they will also invest significant sums on transport, IP, and other types of network infrastructure. Digital Realty, for instance, recently signed a data center interconnect deal with Ciena. CNNOs' power management strategies will also be key to helping the network operator market improve its carbon footprint. In fact, sustainability is a common investment theme cutting across all three types of network operators. Telcos are most important, as they have the oldest, most complex networks and also the biggest opportunity for improvement. Across the key segments, most key network operators publish sustainability reports and have stated targets for carbon neutrality and/or net zero status. In the past, energy cost savings was the key motivator. Increasingly, though, key executives across the network operator industry are addressing sustainability as a moral issue which requires urgent attention, and investment - these leaders should be applauded.

Read More

MTN Consulting is focused on network operators & their technology supply chains, tracking the economics of the network operator business and assessing the big shifts that impact technology spending trends. Our coverage includes:

  • 3 major network operator markets
  • 190+ operators
  • 40+ time series
  • 50 reports published per year

Latest report

Network Operator Forecast Through 2026

Global economies have recovered from the worst of last year’s pandemic, but COVID-19 has caused some long-term shifts in market dynamics. Network traffic growth rates have accelerated, new business models emerged, cloud services matured and spread to new verticals, applications and customer sizes. Networks are more important than ever. Revenue growth rates and profitability in all three segments that we track – telco, webscale, and carrier-neutral – have been stronger in recent quarters than anticipated. Network investments have grown, at sometimes stunning rates. Total network operator capex, across the three segments, is likely to total US$520 billion (B) in 2021, up 13.4% from 2020. Much of this year’s growth came from webscale, which will end 2021 at about 32.1% of total capex, from 29.3% in 2020. But telco and carrier-neutral capex have also spiked. Looking ahead to 2026, capex growth rates will slow considerably but total capex is likely to reach $629B by 2026. In that year, telco, webscale, and carrier-neutral segments will account for roughly 51%, 40%, and 9% of capex, respectively. Networks will increasingly revolve around data centers, which will continue to proliferate both at the core and edge. Data center innovation will continue to be rapid, as webscalers push the envelope on network design and function, and telcos seek cheaper ways of running their networks. The telco need for cost efficiency will rise as overhyped 5G-based opportunities fail to materialize in any big way. Carrier-neutral operators (CNNOs) will remain important to telcos and webscalers, and benefit from an ongoing wave of new capital which will help them transform to more integrated providers of “digital infrastructure” assets. Network operator interdependence MTN Consulting’s Global Network Infrastructure (GNI) service tracks the economics of telcos, webscalers, and carrier-neutral operators. The three groups are not homogenous. Webscale revenue models revolve around a diverse mix of advertising, devices, software, cloud services, and ecommerce. Carrier-neutral providers rent network infrastructure to other businesses. Telcos sell subscription and pay-as-you-go services for communications services, including bandwidth, video, mobility, and enterprise services. There is a huge amount of variety in these discrete market segments. What’s more important, though, is that the three segments rely on each other in important ways. Carrier-neutral players get most of their revenues from telcos & webscalers needing to fill gaps in network coverage. Telcos rely on CNNOs to lower their cost of operations, and need webscalers to provide services and apps which make their network worth using beyond telephony. Webscalers lack last mile access networks, and can only deliver their services to the mass market over telco infrastructure. Webscalers also, despite big capex outlays, can only blanket the globe with data centers by partnering with CNNOs for collocation. Looking ahead, this interdependence will grow. The big cloud providers in the webscale market, for instance, have targeted the telecom vertical and found success; AWS, Azure and GCP recorded about $2B in revenues from telcos over the last 4 quarters. Telcos are making some big bets on cloud technology as they deploy 5G core networks. Both telcos and webscalers want to provide seamless, resilient network coverage, including at the edge, and can’t build it all themselves. As a result, they’ll need to scale up their partnerships with carrier-neutral players like Equinix and American Tower/CoreSite. CNNOs are increasingly taking over the “dumb pipe” aspects of the network, and to be competitive and upsell they will integrate assets across fiber, cell tower and data center. Telco revenues will grow just a bit; capital intensity to fall after 2023, towards 15% range From an unusually weak 2020 base, telco revenues are likely to grow nearly 7% in 2021 to $1,912 billion, but growth thereafter will return to the more typical 1-3% range per year range. By 2026, telco revenues are likely to measure $2.1 trillion. Telco capex is also rising in 2021, up about 8% to $317B, and will hover around $330B for the next three years until falling to $320B by 2026. Drivers for investment in the near term include: expanding 5G RAN coverage; infrastructure for new 5G-based services; replacing Huawei gear; government subsidies of fiber deployment (US and Europe, mainly); 5G stand-alone core projects; transmission and IP-layer (e.g. intent-based routing) upgrades; network automation; and a broad range of software investments, including projects done in collaboration with webscalers (which do impact capex, thanks in part to flexible accounting rules). Software will rise from about 15% of capex last year to 20% by 2026. The main constraint on telco investment is limited prospects for top-line growth. Telcos will remain in a constant battle with their cost structure, seeking to deploy technologies which help lower cost per bit, lower energy costs, lower the cost of running networks. Telco collaborations with webscalers on service creation and delivery, and network offload, will also help on the cost side, as will reliance on CNNOs for key network assets. Regionally, the strongest capex growth rates (from a 2020 base) will be seen in India and MEA. India has all of its 5G deployment ahead of it. MEA includes markets with very underdeveloped fixed network infrastructure, and increased data center & subsea investment underway should help spur this along. The telecom industry will continue to shrink headcount, dropping employees from 5.09M in 2019, to 4.77M this year, and further to 4.44M by 2026. The average employee will cost more, though, as the skillsets required to build and run tomorrow’s networks are far different and also pricier. Telco labor cost per employee was US$53.1K in 2019, $54.5K in 2020, about $58K in 2021, and will rise further to $77K by 2026. As a result, the share of operating expenses (opex) (excluding depreciation & amortization) devoted to labor costs will also rise, up from 22% this year to 24% in 2026. Webscale capex likely to pass $250B by 2026 as revenues approach $3.5 trillion The webscale sector saw incredible growth rates in 2021 on the back of changes wrought by COVID: cloud services adoption, ecommerce spreading far and wide, and a strong digital ad market. Adoption of 5G devices has also helped one key webscaler, Apple. As a result, total webscale revenues exploded from $1.71T in 2020 to about $2.14T in 2021. Growth will slow but the sector will continue to leverage its scale and cash to push into new markets, with 2026 revenues likely to reach about $3.46T. Capex also spiked in 2021, likely to end the year at about $167B (2020: $134B), and will hit about $253B by 2026 even with significant slowdown in growth. About 45% of the 2026 capex budget will for Network, IT and software investments, from about 41% in 2021 when ecommerce-related investments were relatively important. While webscalers have different business models, they all need massive data center-centric networks to support their operations. Webscalers continue to build out huge facilities at the core, across the globe, and also building out network edges to improve resiliency, latency and coverage. They’re also investing heavily in new technologies for their data centers, to economically support their growth and deliver new services and network functions. US-based webscalers have been doing this for many years, and Facebook announced a big new capex push for 2022 recently aimed at implementing more AI/ML capabilities in its facilities, to support “ranking and recommendations for experiences across” its products. Increasingly the Chinese players are getting in the self-design game. At Alibaba’s recent Apsara conference, for instance, the company unveiled several new proprietary products, including the Yitian 710 server chip, the X-Dragon architecture, the Panjiu cloud-native server series, Alibaba AI and big data platform and a new generation of PolarDB database. Carrier-neutral the smallest market but plays key role, will grow capex share to 9% by 2026 As we discussed in a mid-2021 report, the carrier-neutral sector is currently seeing a transformation driven by the desire to integrate multiple types of assets under one roof. That includes companies acquiring across traditional asset boundaries, such as the recent American Tower-CoreSite acquisition, and the investments by private equity firms to invest across asset classes. There will be bumps in the road as a new breed of CNNOs emerge, but they are likely to play even more important roles in the network infrastructure market within 2-3 years. Their integrated offerings will prove attractive to both telcos and webscalers, for financial and operational reasons, and allow them to focus more on their core businesses. The CNNO segment is the smallest we cover, but its revenues will more than double between the 2020 base of $76 billion to reach roughly $155B by 2026. Their capex will come close to doubling, up from $29B in 2020 (6.4% of the combined telco/webscale/CNNO total) to about $56B in 2026 (8.9% of total). Much of the CNNOs' capex is devoted to real estate and low-tech investments, but they will also invest significant sums on transport, IP, and other types of network infrastructure. Digital Realty, for instance, recently signed a data center interconnect deal with Ciena. CNNOs' power management strategies will also be key to helping the network operator market improve its carbon footprint. In fact, sustainability is a common investment theme cutting across all three types of network operators. Telcos are most important, as they have the oldest, most complex networks and also the biggest opportunity for improvement. Across the key segments, most key network operators publish sustainability reports and have stated targets for carbon neutrality and/or net zero status. In the past, energy cost savings was the key motivator. Increasingly, though, key executives across the network operator industry are addressing sustainability as a moral issue which requires urgent attention, and investment - these leaders should be applauded.

Read More

Our Three Core Offerings

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MTNC’s research is focused on communications network infrastructure, a market attracting $3.5 trillion in annual operator revenues. Our goal is to provide credible, holistic assessments of where the NI market currently stands and where it is headed. Reports address market and technology trends, key players, and country dynamics.

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MTNC bundles its research into an annual subscription service called “Global Network Infrastructure”. GNI provides clients with an end-to-end view of the network operator business, assessing the big shifts that impact technology spending trends. GNI clients include technology vendors (chips, network equipment and software, IT services), operators, regulators, and investors.

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Our consulting services include: scenario planning; market sizing, forecasting, and analysis; organizational strategy; marketing support; competitive benchmarking; and, due diligence support for M&A and PE transactions. We bring experience and independence to the table, and access to the proprietary databases generated by our GNI subscription program.

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Blogs

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Connected cars – Data protection, privacy, and cybersecurity...
Posted by: Waseem Haider on 03/09/2021

CONNECTED CAR TECH SERIES PART 4: Complex regulatory landscape threatens to restrict the market's development  Contributed by: Waseem Haider In the last three parts of our Connected Car Tech Series, we talked about the

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Telco NI vendor market in 2Q21 – preliminary findings...
Posted by: Matt Walker on 11/08/2021

Growth returns to telco NI market; momentum shifts to cloud, away from Huawei  Preliminary results show 2% YoY sales growth in 2Q21 Enough vendors have now reported their 2Q21 results to allow for some preliminary conc

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What Can President Biden Do to End the Disinformation Age?...
Posted by: Melvin Bankhead III on 25/01/2021

On Jan. 6, 2020, something extraordinarily dangerous occurred. During Congress’ certification of the Electoral College votes from the 2020 election, armed protesters stormed the Capitol Building, overwhelming police officer

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On the digital front, what can President Biden do to enhance our secur...
Posted by: Melvin Bankhead III on 28/12/2020

After Joseph R. Biden Jr. takes the oath of office on Jan. 20, 2021, the newly inaugurated president of the United States will need to contend with an America in turmoil. Naturally, the scourge of COVID-19, and its devasta

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Post-pandemic chip M&A splurge targets the data center market; ro...
Posted by: Arun Menon on 22/11/2020

After a prolonged hiatus, M&A activity in the semiconductor landscape ramped up significantly this year, nearing the record levels of 2015. The consolidation surge was particularly notable during the second half of 2020.

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THE RISE OF DIGITAL ADVERTISING AND THE DEATH OF OBJECTIVE JOURNALISM...
Posted by: Melvin Bankhead III on 09/07/2020

In the beginning, the people of Earth told their truths, voiced their opinions, and advertised their wares and services in print media such as newspapers and magazines. And the people of Earth looked upon their works, and

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MTN Consulting’s Market Data bundle is designed for clients who need to understand all three types of network operators we track – telecom, webscale, and carrier-neutral. The bundle includes all of our Excel-based Market Review reports tracking these individual operator segments.
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MTN Consulting’s Telecom Network Operator (TNO) bundle provides clients with a deep dive into the telecommunications segment of network operators. The bundle’s products help clients understand how telcos are growing and transforming their operations.
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MTN Consulting’s Webscale Network Operator (WNO) bundle provides a deep look at the webscale segment of network operators – how it’s growing, how individual WNOs are building out their networks, and which suppliers are benefiting.

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Clients based in Europe can first contact our Head of Business Development for that region, Waseem Haider, who is based in Berlin. In addition, any client can always contact Matt directly to discuss business opportunities.

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