Telecom network infrastructure vendors’ revenue dropped 1.7 percent to $212.7 billion in 2019, according to MTN Consulting.
Sale of telecom network infrastructure to telecom operators dipped 4.2 percent to $56.8 billion in the fourth quarter of 2019. Sale of networking equipment will face huge challenges in the first and second quarter of 2020 due to coronavirus impact.
Telecoms Capex and Opex (ex-D&A) fell 1.7 percent and 2 percent in 2019, respectively. Capex dropped 3.3 percent in Q4 2019. Telecoms’ spending was constrained by trade wars, supply chain dislocations, and weakening economic outlooks.
Annualized Capex declined 1.6 percent to $297 billion in Q4 2019, as debt concerns grew, and operators became keen on open networking, cloud partnerships, and asset spinoffs to cut Capex, MTN Consulting said.
Factors constraining telecoms spending
# lack of suitable spectrum for wide-scale deployments
# concerns about the cost of new spectrum
# uncertainty about Huawei
# vendors’ desire to buy market share, pushing down the size of contracts
# increasing maturity of open networking
# rising ability of cloud providers and the carrier-neutral sector to help telcos fill out key portions of their network infrastructure
Big winners of 2019 were NEC, Samsung, Ericsson, Intel, and Infosys.
Huawei, Ericsson, Nokia, China Comservice, Cisco, ZTE, CommScope, NEC, Intel and Samsung were the top 10 technology vendors in the $212.7 billion telecoms networking infrastructure market in 2019.
Top 10 NI vendors
# China Comservice
Huawei’s $42.9 billion revenue in telecoms NI revenues beats all rivals, and nearly exceeds the sum of the second and third ranked vendors Ericsson and Nokia. Huawei lost share in 2019, but due largely to US restrictions.
DyCom, Ciena, Mavenir, Amdocs, and Dell Technologies (including VMWare) achieved impressive results in 2019 in the telecoms vertical.
The losers of 2019 in the telecoms market are Cisco, Technicolor, YOFC, and Juniper Networks.
Telecom operator revenue grew 1 percent to $465 billion in Q4. Telecoms’ spending on employees, or labor costs reached $291 billion in 4Q19 on an annualized basis, down 0.4 percent from 4Q18.
Telco industry operating margins have been stable for the last 11 quarters, averaging around 13.6 percent. Single quarter operating margins increased in 4Q19, to 13.3 percent from 11.1 percent in 4Q18. The rise in margins is due to a fall in Opex which declined by 1.4 percent in 4Q19 versus 4Q18.