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Telecom’s biggest vendors - 1Q22 edition

Some of Telco NI’s recent growth is a bounce back from COVID-plagued 2020, when telco spending weakened. But more of the growth is due to high overall demand. Telcos are spending more on cloud, software, fiber, 5G core, automation, and upgrades to backbone optical and IP networks to support 5G migrations. There is also less supply side competition outside China, with Huawei now frozen out of many country markets; prices and project values are inevitably pushed slightly higher as a result. Inflation worsens this.

Vendors are generally optimistic in their guidance but caution that supply chain shortages persist, and widespread inflation and macroeconomic concerns are major risks in the short term. Ericsson, IBM, Oracle, and Accenture, all top 25 vendors, have already reported 2Q22 results. Accenture continues with strong growth, due in part to acquisitions. Services-focused vendors like Accenture are relatively well positioned to escape the supply chain crunch; cloud providers are in the same boat. But Ericsson, IBM, and Oracle all note that supply chain issues and macroeconomic uncertainty weigh heavily in the short term. Russia's war on Ukraine also weighs spending in these two markets and adjacent ones, and is responsible for at least part of the current global problem with inflation.

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

The top three vendors in the 1Q22 annualized Telco NI market were the largest three traditional “network equipment providers” (NEPs), as usual: Huawei, Ericsson, and Nokia. Their shares in this 12 month period were 18.8%, 11.1%, and 9.0% share, respectively. ZTE, which has been rising lately due in part to Huawei’s challenges, placed fourth with 5.2% annualized share. China Comservice is the largest non-NEP and ended 1Q22 in fifth place; most of its revenues come from Chinese network construction and maintenance projects. Cisco ranked...

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Matt Walker
Chief Analyst
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