Slower 5G deployment triggers 17% drop in telecoms’ kit industry growth

Telecoms equipment revenues fell by 17 per cent worldwide during the first half of the year according to Dell’Oro, blaming it on excess inventory, weaker demand, and slower 5G deployments.

Dell’Oro, which focused on worldwide telecoms equipment revenues across the six telecoms programmes it tracks – namely broadband access, microwave and optical transport, Mobile Core Network (MCN), Radio Access Network (RAN), and SP router and switch – declining 16 per cent YoY in the second quarter of 2024.

It said this represented a fourth consecutive quarter of double-digit contractions, contributing to the overall decline of 17 per cent in the first six months.

Dell’Oro described these as ‘abysmal results’ and blamed excess inventory, weaker demand in China, ‘challenging 5G comparisons’, and elevated uncertainty.

The slump, according to the research body, was registered across the board, geographically, with slower revenue growth on a YoY basis in all regions, including North America, EMEA, Asia Pacific, and CALA (Caribbean and Latin America). It said ‘varied momentum’ in activity during the period was particularly significant in China apparently, where the total telecom equipment market stumbled in the second quarter, also declining 17 per cent.

Similarly, all the different types of telecoms equipment Dell’Oro tracks seemed to have been impacted as opposed to one sector dragging down the numbers, with all six telecoms programmes declining in the second quarter.

In addition, RAN and MCN revenue continued to be blighted by slower 5G deployments, and spending on SP Routers fell by a third in 2Q24, it says.

In terms of which of the top players are, things were mostly unchanged. The top seven suppliers – namely Huawei, Nokia, Ericsson, ZTE, Cisco, Ciena, and Samsung – accounted for 80 per cent of the worldwide telecoms equipment market. Huawei and ZTE did see some gains – combined they clawed nearly three percentage points of share between 2023 and 1H24.

The analyst also pointed out that even with the ongoing efforts by the US government to hinder Huawei, the Chinese vendor ‘is still well positioned in the broader telecom equipment market, excluding China, which is up roughly two percentage points relative to 2019 levels.’