This is a bad news for all telecom infrastructure vendors — especially Ericsson because the Stockholm-based telecom network maker was the market leader in the global basestation segment last year.
The first sign is that macrocell basestation spending will decline by 2 percent to $48 billion in 2016, as telecom operators shift Capex to network densification.
The decrease in worldwide basestation spending will be in double digits each year after the 2 percent drop in 2016, said ABI Research.
The decline in basestation spending means that global telecom operators are shifting Capex to less capital intensive solutions, including small cells, DAS, and Wi-Fi for densification.
India, which has more than 900 million mobile subscribers, will dominate spending in Asia Pacific over the next few years.
The telecom research report noted that North America’s 4G coverage is virtually complete as the region prepares for 5G along with Japan and South Korea. North America will see the biggest declines as deployments for LTE coverage diminish.
Asia Pacific region is still the largest basestation market in 2016, but down from its 2015 peak as China completes its LTE rollout, said ABI Research.
Ericsson was the leader in the overall basestation market in 2015. Huawei, Nokia Networks, Alcatel-Lucent and ZTE were the other top basestation vendors based on revenue. But these telecom network companies will face challenges in the months ahead.
ABI Research says as the 5G technology cycle gets underway, basestation vendors including Ericsson, Huawei, and Nokia will face the challenge of replacing lost revenue in the short term. While the early commercialization of 5G will help to replace this lost revenue, it is not until well after 2020 that this contribution becomes meaningful.
ABI Research suggests Ericsson, Huawei, and Nokia need to find alternative revenue streams to make up for the lost revenue from basestations. Both Ericsson and Huawei are already reeling under pressure due to drop in overall sales in most of the regions.