Ovum's new capex forecast projects that communications provider (CP) capex will exceed $2.1 trillion over the next five years (2017–21). Well over $800bn of this capex will reach vendors. Spending their technology budgets wisely, though, will continue to challenge CPs as revenue growth rates slow.
Industry capex set to fall in 2017 but a recovery will come
Total revenues for the three types of communications providers (CPs) we track will grow from $2,851bn in 2015 to $3,427bn in 2021. This is a compound annual growth rate (CAGR) of 3.1%, down from the 4.2% CAGR achieved in the prior six-year period (2009–15). Telcos, or communications service providers (CSPs), remain the core of the market. But their growth will be outpaced by the OTT/cloud-centric Internet content provider (ICP) segment, and the smaller carrier-neutral provider (CNP) group. As a result, telcos will account for 58% of market revenues in 2021, from 63% in 2015.
Capital expenditures (capex) for all CP types will grow from $411bn in 2015 to $418bn in 2016. However, both CSP capex segments are set to decline in 2017, with mobile falling 9% to $175bn. It will take several years for mobile capex to recover, as networks digest LTE and 5G arrives slowly and relies heavily on software. By contrast, fixed CSP capex will see a modest resurgence starting in 2018 due to cloud and deep fiber access builds. The ICP segment is delivering the real growth, though, growing from $42bn in 2012 to $62bn in 2015, and tipping above the $100bn mark by 2020. By 2021, total CP capex will amount to roughly $474bn. In 2015, CSPs accounted for 83% of total industry capex, but that will fall to 73% by 2021 as ICPs grow share and industry influence.
Ovum's recently published capex forecast provides a detailed analysis of these numbers and the trends shaping them. The CSP part of this forecast breaks out results for 67 individual country markets. Among the findings for 2017–21:
Fixed capex in the US is double that of China, even though the two mobile markets are around the same size.
Australia's NBN push will make it the fourth largest fixed market for vendors, but the country is ranked just 17th in mobile capex.
Only two western European markets are on the mobile capex top 10 list: Germany and France. For the top 10 in fixed, the UK and Italy also appear.
For both fixed and mobile markets, the same three country markets total to nearly 50% of global capex: US, China, and Japan.
More details are available in Ovum's Communications Provider Revenues & Capex Forecast: 2016–21.
Communications Provider Revenues & Capex Forecast: 2016–21, TE0006-001300 (November 2016)
Communications Provider Revenue & Capex Highlights: 2Q16, TE0006-001291 (October 2016)
5G Service Provider Tracker: 3Q16, TE0014-000426 (October 2016)
Market Share Report: 2Q16 SP Switching & Routing, TE0006-001296 (October 2016)
OSS/BSS Revenue Forecast Report: 2016–21, IT0012-000181 (October 2016)
Market Share Report: 2Q16 ON Global, TE0006-001289 (September 2016)
Market Share Report: 2Q16 FTTx, DSL, and CMTS, TE0006-001283 (September 2016)
RAN Vendor Update: 2016, TE0006-001268 (August 2016)
Open Source and Technology Development for NFV, TE0006-001255 (August 2016)
"Telecom vendors get lift from enterprise deals in 2Q16 as CSP purchasing slows," TE0006-001282 (August 2016)
"Industry is uniting around 5G network requirements and early use cases," TE0006-001267 (July 2016)
Global Data Center Analyzer: 2Q16, TE0017-000067 (May 2016)
The Small Cell Market in 2016, TE0006-001222 (May 2016)
Matt Walker, Principal Analyst, Intelligent Networks