Don’t expect a telco spending recovery in 2025 – Dell’Oro

• Telco spending on network technology dipped by 11% year on year in 2024, according to research firm Dell’Oro Group
• The only sector that didn’t shrink was fixed broadband equipment 
• Don’t expect a recovery – overall, telco spending on network gear is expected to be flat this year, notes the Dell’Oro team
• Huawei is still the biggest vendor (even excluding China)

Network equipment vendors hoping to see an uptick in telco spending in 2025 might need to think again, according to the analyst team at Dell’Oro Group, which has reported an 11% year-on-year dip in worldwide telecom equipment revenues in 2024 and expects the value of the market to be flat in 2025. 

The Dell’Oro team tracks telco spending in six telecom networking technology categories – broadband access, microwave transport, optical transport, mobile core network (MCN), radio access network (RAN), and service provider (SP) router and switch – and, according to its calculations based on the financial reports of the main vendors, the value of telco investments dipped in all but one of those categories last year, with the year-on-year decline “driven by multiple factors, including excess inventory, challenging macro environment, and difficult 5G comparisons”. 

The optical transport, RAN, and SP routers and switches sectors suffered double-digit contractions, while microwave transport and MCN “experienced a more moderate combined decline in the low single digits,” noted Dell’Oro VP and analyst Stefan Pongratz in this blog. Broadband access was the exception, where spending was “fairly stable”, he noted.  

What does this mean in actual money terms? The Dell’Oro Group didn’t share exact numbers but, based on previous reports and this reporter’s back-of-the-envelope calculations, that 11% dip values the total market at about $84bn (plus or minus a couple of billion). 

The exact number is less important than the trend, which is negative for the vendor community, as Pongratz notes that while “market conditions are expected to stabilise in 2025 on an aggregated basis… it will still be a challenging year. The analyst team is collectively forecasting global telecom equipment revenues across the six programmes to stay flat.”       

In terms of vendor market shares, Huawei continues to be the single largest company by a long way, with a 31% market share, more than its nearest rivals Nokia (14%) and Ericsson (13%) combined, as the chart above shows. Huawei’s market power is, of course, propped up by its massive share in its domestic market, where it is the lead supplier to China’s three main telcos (China Mobile, China Telecom and China Unicom). 

But, according to the Dell’Oro team’s calculations, even if the value of the Chinese market is stripped out of the equation, Huawei is still the market leader, overtaking Nokia (see top right chart).  

Huawei has yet to publish its annual report for 2024, in which it provides some level of detail about its financial performance across its various divisions and in different geographies but, as reported in early February, the Chinese vendor’s overall revenues (including mobile device sales, enterprise sector revenues and more) are believed to have exceeded 860bn yuan ($118bn), a 22% year-on-year increase from the 704.2bn yuan ($96.6bn) in revenues that Huawei reported for the full year 2023, and 34% higher than the 642.3bn yuan in revenues reported for 2022. The annual report should provide more granular detail and show exactly how much of the company’s revenues came from the telecom operator sector last year. 

- Ray Le Maistre, Editorial Director, TelecomTV