Omdia recently published its inaugural Global Telecoms Capex Tracker, a detailed database of telecom operator capital expenditure (capex) from 1Q19 to 3Q22. We provide an introduction to the database here .
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Summary
Omdia recently published its inaugural Global Telecoms Capex Tracker (see Further reading), a detailed database of telecom operator capital expenditure (capex) from 1Q19 to 3Q22. Omdia updates and publishes the database twice a year, with the next update incorporating 4Q22 figures.
The database provides a comprehensive tracker of telecoms capex, based on the top 10 service providers globally, by revenue. This tracker combines both a top-down and bottom-up approach, using both quantitative and qualitative data from service providers’ financial reporting, press releases, and presentations to inform our estimates of capex allocation. The capex for these top 10 communication service providers (CSPs) was aggregated, scaled up, and adjusted to create global estimates for telecoms capex allocation. The spending by the top 10 CSPs corresponds to around 47% of our total capex estimates for the telecom industry.
The capex estimates are broken down into multiple categories and subcategories (see Figure 1) that broadly map to Omdia’s technology market coverage. The first level of breakdown is into civil infrastructure (9%), access network (37%), transport (13%), core (3%), cloud infrastructure (8%), IT and software (12%), devices and customer premises equipment (CPE) (5%), and other (12%). Some categories are then further divided into subcategories, with separate breakdowns within each of these.
Figure 1: Global telecoms capex flow, 2021
Source: Omdia
Capex allocation has shifted toward the access network and cloud infrastructure since 2019
The database enables comparisons of spending for each of the top 10 CSPs (and the industry overall) over time from 1Q19 to 3Q22. Some takeaways from the data include the following:
- Total telecom industry capex grew 2% in 2020 and 6% in 2021 but has slowed in 2022. In 1H22 capex grew 3% but in 3Q22 capex declined 8% YoY.
- Among the 10 CSPs we analyzed, América Móvil, Verizon, and AT&T had the highest capex growth for the 12 months ending in 3Q22. América Móvil’s high capex growth rate reflects a bounce back from reduced capex spend in 2020 due to difficulties in obtaining supplies, services, and equipment because of the COVID-19 pandemic. Verizon and AT&T have been spending heavily to build out their 5G networks across the US.
- NTT, SoftBank, and Vodafone had the lowest capex growth for the 12 months ending in 3Q22. This is partly due to the appreciation of the yen and euro relative to the US dollar over this period, which has reduced the growth rate when expressed in US dollars. Nonetheless, in local currency units, NTT’s capex still declined by 9% due to its successful cost-reduction program. In 2018, NTT set a cost-reduction target of ¥800bn cumulatively ($6bn) by 1Q24, which it reached by 1Q22. It has now targeted a further reduction of ¥200bn ($1.5bn) by 1Q24, which it aims to achieve by accelerating its digital transformation. SoftBank’s capex grew only 2% in local currency terms; the company was already investing heavily in its 5G network in the previous year. Vodafone’s capex grew 7% in euros. The company has been taking a cautious approach to spending and investment to defend itself from worsening global economic conditions, especially rising energy prices. Nonetheless, continued investment in 5G and fiber throughout Europe remains a priority for the company.
- The average capital intensity (capex/sales) across the industry was 17.0% in 2021, up from 16.3% in 2019. For the 12 months ending 3Q22 it rose to 17.4%.
- Among the 10 companies analyzed, América Móvil (21.1%), China Mobile (20.3%), and China Telecom (20.0%) had the highest capex/sales ratio over the 12 months ending 3Q22. Comcast (8.3%), SoftBank (11.9%), and NTT (13.2%) had the lowest.
- The proportion of capex allocated to access networks has risen from around 35% in 2019 to 37% in 2022 due to increased spending on 5G and fiber networks.
- The proportion of capex allocated to cloud infrastructure has risen from around 6% in 2019 to 9% in 2022.
- Areas where the proportion of total capex declined between 2019 and 2022 include devices and CPE and other (mainly media related).
- China Mobile and China Telecom spent relatively heavily on access networks in 2021, comprising around 46% of their total capex versus 37% for the industry overall. This reflects their heavy investments in 5G and fiber to the home (FTTH).
- China Mobile and China Telecom also spent relatively heavily on cloud infrastructure in 2021, comprising around 18% of their total capex versus 8% for the industry overall. This reflects their successful public cloud offerings in China.
Appendix
Further reading
Global Telecoms Capex Tracker ‒ 3Q22 (January 2023)
Author
Adam Mackenzie, Senior Analyst, Service Provider Network Evolution
