Dell’Oro says in its report on radio access networks (RANs) that the overall 2G-5G RAN market has declined year-over-year for a second consecutive quarter.
Analysys Mason says at the same time that the whole industry “is experiencing a mix of declining revenue and increasing investment costs, underperforming compared to the market index”.
And it “still has some of the highest capital expenditure thanks to network and infrastructure investments, particularly relating to deploying 5G and the prospect of 6G”, says Analysys Mason.
Stefan Pongratz (pictured), VP at the Dell’Oro group, said: “After four years of extraordinary growth that catapulted the RAN market to record levels in 2021, the RAN market is now entering a new phase.”
He said: “Even with 5G still increasing at a healthy pace, comparisons are more challenging and the implication for the broader RAN market is that growth is decelerating.”
Dell’Oro’s preliminary findings suggest the slower momentum that characterized the RAN market in the first half of 2022 extended into the third quarter. And this is continuing.
Pongratz said: “Still, one major difference between 4G and 5G is the fact there are now more frequency options for the operators to pursue, which helps to curb the decline in the post-peak rollout phase.”
The report says, unsurprisingly, that the top five global suppliers in the quarter are Huawei, Ericsson, Nokia, ZTE and Samsung. The top four suppliers outside of China in the quarter are Ericsson, Nokia, Huawei and Samsung.
Short-term RAN prospects have been revised downward to reflect weaker-than-expected developments in the first three quarters of 2022. Global RAN revenues are now projected to decline at a low-single-digit rate in 2023, underpinned by surging RAN investments in India and more challenging comparisons in China, Europe and North America.
Analysys Mason says the biggest issue facing the sector in 2023 is how it copes with the impact of inflation, particularly rising energy costs, and the reaction to any price rises that are passed on to customers.
In addition, this is set against a backdrop of existing market challenges that are already testing the industry’s ability to deliver services, open up new revenue streams and return value to shareholders.
Larry Goldman, chief analyst at Analysys Mason, said: “After a decade of low inflation and low interest rates, the telecoms sector faces the uncertainty of how it will be affected by these cost increases and the degree to which it can increase its own prices in response.”
He added: “Combined with high investment costs and questions about potential returns, the market outlook is challenging as the telecoms industry tries to steer its path through price rises, rolling out network availability and launching new services.”
According to Analysys Mason’s report, “the sector has underperformed compared to the market index over the past decade, reporting a low return in 2021”.
This was 7 percentage points below the European market, and a similar performance against the markets in North America and Asia.
“And it has some of the highest capital expenditure thanks to network and infrastructure investments, particularly relating to deploying 5G, the further evolution of 5G architecture and the prospect of 6G.”
