Thanks for your interest in our latest research. You can view a summary of our latest report below.

Telco Capex: 4Q20 Results & Outlook

The global telecom industry bounced back in 4Q20 with 3.4% and 1.2% YoY growth in revenues and capex, respectively. Revenues for CY2020 declined 1.1% to $1.794 trillion. This is not exactly a sign of 5G stimulating market demand, but reassuring relative to the 5.4% YoY revenue decline recorded during the worst quarter of the pandemic's spread, 2Q20. Total industry capex for 2020 was $294.1 billion, down 1.8% YoY, due in part to a 7.3% surge in China as a government push accelerated 5G rollouts. Japan was also a highlight due to Rakuten, NTT and KDDI. The biggest capex declines in 2020 occurred at AT&T, Jio, America Movil, Telefonica, and Vodafone Idea. The reductions at Jio and VI illustrate a common telco predicament: the need to restrain network capex to cope with expensive spectrum costs.
The relationship between capex and revenues in the telecom industry has stabilized, with annualized capital intensity remaining in a narrow window around 16.5% for several years. 2020’s figure was 16.4%. This outperforms the 16.0% MTN Consulting expected for 2020, but we still expect average capex/revenues to glide towards the 15% range by 2025. That is just an average; individual telcos continue to record a wide range of capital intensity metrics, from the low single digits to an extreme of 148.2%, for Rakuten.
In the M&A world, the biggest industry change in 2020 was the completion of Deutsche Telekom's acquisition of Sprint. This has pushed DT into a leadership position in the industry, as it recorded $6.5B in 4Q20 capex, exceeding even China Mobile's second-ranked $6.0B. Expect DT to exert a stronger influence on industry standards and vendors’ product decisions going forward. Also, the company’s now larger exposure to the US market will tend to make it more sympathetic to the growing global reluctance to use Chinese vendors’ gear. After DT and CM, the biggest spenders in terms of 4Q20 capex were AT&T, NTT, Verizon, China Telecom, Comcast, Vodafone, Orange, and China Unicom. This pecking order is largely unchanged from recent periods, where the top few operators in the US, China, and Europe dominate rankings.
Relative to company size, the biggest spenders among major telcos in 4Q20 were...
Read more
To see our most recently published reports, click here

Best regards,
Matt Walker
Chief Analyst