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Telecom’s biggest vendors - 4Q21 edition

The telco network infrastructure (Telco NI) market had a blockbuster year in 2021. Vendor revenues in the telco vertical surged 7.8% from 2020 to end the year at $232.1 billion (B). This was the biggest market and strongest overall growth in at least 8 years. Strong vendor revenues were consistent with customer spending dynamics: telco capex grew 10% YoY in 2021, to $325B, and opex grew about 5%.

Some of Telco NI’s 2021 growth is just a bounce back from COVID-plagued 2020, when telco spending weakened. But more of the growth is due to high overall demand. 5G RAN spending is a driver, but that was more a factor in 2020. In 2021, telcos spent more on 5G core, services deployment, and cloud collaborations. Fiber access was strong in a number of geographies. Transport and IP infra spending is also looking up where 5G penetration is strong and traffic growth requires capacity increases further upstream. Huawei bans are an issue: some incremental capex was spent on rip and replace projects, but the bigger effect was less price competition without Huawei, causing some projects to grow. Finally, a small portion of the market’s measured growth can be explained by depreciation of the US dollar: the Chinese RMB and Swedish Kroner, for instance, gained 6.5% and 6.9% in value versus the dollar in 2021, versus 2020.

NEPs dominate top 10, but telcos rely on dozens of services, software and connectivity specialists

The top three vendors in 2021’s Telco NI market were the largest three traditional “network equipment providers” (NEPs), as usual: Huawei, Ericsson, and Nokia. Their 2021 shares were 18.8%, 11.2%, and 9.1% share, respectively. China Comservice is the largest non-NEP and ended the year in fourth place; most of its revenues come from Chinese network construction and maintenance projects. ZTE and Cisco, both NEPs, were ranked 5 and 6, respectively. Intel follows with a rank of 7. While we consider Intel an NEP, it is in a class of its own: some of its telco sales are via OEM relationships, and most of the value of its telco offerings are in chips and software. CommScope follows in 8th place. We consider CommScope a connectivity specialist, not an NEP, but it does provide telcos with equipment that goes well beyond connectivity (e.g. small cell baseband controllers). NEC ranked 9 in 2021, with its revenue base a mix of mobile infra, microwave transmission and wireline. The last vendor in the top 10 is...

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Matt Walker
Chief Analyst
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