The global Radio Access Network (RAN) industry is undergoing a significant shift as it transitions from the 5G era to the forthcoming 6G technology.
According to the RAN 2030 Forecast released in November 2023, RAN revenues are projected to increase at a compound annual growth rate (CAGR) of 1 percent between 2020 and 2030. This marks a deceleration from the 2 percent CAGR seen during the 4G era.
The forecast’s base case scenario suggests that RAN revenues reached their peak in 2021 and will continue to experience a downward trend before gaining momentum in the latter part of the forecast period.
Key Findings from the RAN 2030 Forecast:
Cumulative Revenues: Cumulative RAN revenues from 2020 to 2030 are anticipated to surpass $0.4 trillion, underlining the enduring significance of this industry.
6G Wave: Macro RAN deployments are expected to dominate the initial wave of 6G technology adoption, highlighting the ongoing importance of traditional network infrastructure.
Cloud RAN’s Leading Role: Cloud RAN is anticipated to play a prominent role right from the beginning of the 6G era, indicating the growing influence of cloud-based solutions in the RAN market.
Small Cells: Small cells are projected to comprise approximately 15 percent of the RAN market by 2030, showcasing the evolving landscape of network deployment.
Despite the marginal growth in RAN revenues, the forecast emphasizes the telecom industry’s continued challenges. Mobile operators may temporarily increase capital intensities to support the deployment of new technologies, but this acceleration tends to be short-lived, resulting in a relatively flat trendline over time.
Operator revenue trends are identified as a limiting factor. The potential upside for the RAN market is seen in emerging opportunities such as Fixed Wireless Access (FWA) and private wireless, which are expected to compensate for sluggish Mobile Broadband (MBB) advancements.
Stefan Pongratz at Dell’Oro Group stated, “We believe that the tangible and intangible assets operators have amassed over the past decades are essential for addressing the evolving connectivity needs of consumers and businesses.” He expressed confidence that operators would maintain a leading role in providing connectivity by the end of the decade.
However, Ericsson, a major RAN supplier, did not provide revenue guidance beyond Q4, 2023, citing market uncertainty. Borje Ekholm, President and CEO of Ericsson, expressed caution, saying, “As timing for the market mix recovery is in our customers’ hands, we prudently plan for current market conditions to prevail into 2024.” Ericsson’s primary focus is on cost management and operational efficiency to ensure profitability and capture the next wave of network innovation.
Nokia, another prominent player in the RAN market, forecasts a slightly reduced addressable market in 2023. The addressable market for Network Infrastructure is estimated to be 43 billion euros (down 1 percent), while the addressable market for Mobile Network is anticipated to be 44 billion euros (down 9 percent) in 2023.
Ericsson, in a recent note to investors, said that the mobile networks market has been flattish for two decades, and it will continue. However, the high paced mobile data growth, further spurred by new use cases, is the underlying driver for the market to recover to a more normal level.
Revenue of Huawei, the leader in RAN business, rose 1.5 percent to 145.7 billion yuan during the third quarter, according to Reuters. Huawei has attributed the third-quarter revenue growth to increases in the digital power, cloud and auto parts businesses.
The telecom equipment industry is relatively early in the 5G cycle with 75 percent of all radio base station sites, outside China, not yet updated with 5G mid-band. Ericsson believes that competitive dynamics in customer markets tend to lead to relatively sharp increase in investments when the market turns, and it is seeing some positive signs in early 5G markets.