Telecom industry Capex fell 1.8 percent to $294.1 billion in 2020, according to the latest report from MTN Consulting.
Telecom operator revenues declined 1.1 percent to $1.794 trillion in 2020 and increased 3.4 percent in Q4 2020.
Telecom Capex dropped last year, due in part to a 7.3 percent surge in China as a government push accelerated 5G rollouts.
Rakuten, NTT and KDDI, three leading telecom operators in Japan, have also stepped up their Capex targeting 5G.
The biggest capex declines in 2020 occurred at AT&T, Jio, America Movil, Telefonica, and Vodafone Idea. The reductions at Jio and Vi illustrate a common telco predicament: the need to restrain network capex to cope with expensive spectrum costs.
Capex to sales ratio was 16.4 percent in 2020.
Capex of Deutsche Telekom, which acquired Sprint, touched $6.5 billion in Q4, exceeding even China Mobile’s $6 billion.
After Deutsche Telekom and China Mobile, the biggest spenders in terms of 4Q20 Capex were AT&T, NTT, Verizon, China Telecom, Comcast, Vodafone, Orange, and China Unicom. This pecking order is largely unchanged from recent periods, where the top few operators in the US, China, and Europe dominate rankings.
The biggest spenders among major telecom operators in 4Q20 were Telecom Italia, Veon, Rostelecom, Ooredoo, CK Hutchison, and Iliad. All recorded capital intensity above 30 percent on a single quarter basis.
The transition to 5G is not the only factor. Costly fiber deployments were an issue for Iliad and Telecom Italia.
Veon spent heavily on scaling up 4G across its footprint.
Rostelecom’s core capex is supplemented by state program investments; the company’s share capital is 38 percent owned by the Federal Agency for State Property Management.
For Ooredoo and CK Hutchison, 5G was the main driver; CK Hutchison has already made adjustments to its Capex burden by agreeing to sell its European towers to Cellnex.
One cost driver for many of the telcos with high capex burdens is the growing cost of developing and/or acquiring software.
MTN Consulting is expecting $1,791 billion in revenues and $292 billion in Capex for telecom industry, with an average capital intensity of 16.3 percent in 2021.
Nokia and Ericsson will not gain much business in the wake of uncertainties faced by China’s Huawei and ZTE. MTN Consulting’s view is the impact from the Huawei issue will be minimal, given pressure from a rising Samsung and momentum behind Open RAN architectures.