Telecom Capex Declined in 2023 as Operators Scale Back on 5G

According to the report from Dell’Oro Group, telecom operators are now scaling back their investments in 5G. Preliminary findings show that worldwide telecom capex, the sum of wireless and wireline/other telecom carrier investments, declined for the full year 2023 in nominal terms, recording the first contraction since 2017.

5G-related capital intensity ratios peaked in 2022 and are on track to approach 15% by 2026, down from 18% in 2022. Its gloomy outlook stated worldwide capex is projected to decline at a mid-single-digit rate in 2024 and at a negative 2% to 3% CAGR by 2026. Operator revenue is predicted to increase at a 1% CAGR over the next three years.

“The fundamental challenges have not changed. Operators have a fixed capital intensity budget and capex is largely constrained by the revenue trajectory,” said Stefan Pongratz, Vice President and analyst with Dell’Oro Group.

“What is complicating the situation is that the revenue pie remains fixed. Following some positive developments amidst the peak of the COVID-19 pandemic, our analysis shows that operator revenue growth slowed in 2023 and has more or less remained stagnant over the past decade. And based on the guidance, operators, in general, are not overly optimistic that emerging opportunities with generative AI, edge computing, enterprise 5G, FWA, and 5G-Advanced will expand the pie,” added Pongratz.