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Telecom’s biggest vendors - 1Q23 edition

The Telco NI market is fueled by spending in the telecom operator (telco) sector, so the financial health and spending patterns of the telco market are worth reviewing.

Vendors in the Telco NI market are keeping a close watch on the earnings and spending needles of telcos, as both indicators declined in the past year. While 1Q23 telco earnings are not yet available, the revenue trendline is negative: in 4Q22, global telco revenues plunged the most in more than a decade to post $429.6B, down 9.3% YoY – the fifth consecutive slump in a row. This impacted annual revenues and its growth rate for the year 2022 – they were $1,779.9B, down 5.9% YoY over the previous year. The sluggish top-line turned telcos cautious around spending on capex, the main driver for the Telco NI market, which declined for the second straight quarter to post $87.9B in 4Q22, down 5.1% YoY. This decline also knocked down annualized capex to $322.1B in 4Q22, from the peak of $330.0B in 2Q22.

On the brighter side, capex has held out better than revenues, pushing annualized capital intensity to a new all-time high of 18.1% in 4Q22. This was driven by a few countries who are in the midst of deploying 5G networks, notably India; while many more continue to scale up 5G to reach mass market coverage, and deploy fiber to support fixed broadband and to connect all the new radio infra (including small cells) needed for 5G. Cloud vendors are also making critical inroads into the telco sector, aided by a growing number of stand-alone 5G core networks.

Telco NI vendor revenues were...

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Best regards,
Matt Walker
Chief Analyst
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