- Decline driven by end of 5G boom and stagnating revenues
- Dell’Oro forecasts continued contraction amid trade uncertainty
What happened: Capex cutback reflects shift from growth to efficiency in telecoms
Telecom operators worldwide reduced capital expenditures by 8% in 2024, according to preliminary data from analyst firm Dell’Oro Group. This downturn marks a significant cooling-off period following the conclusion of major 5G and fibre infrastructure investments. The report, which defines global telecom capex as the combined investment in wireless, wireline, and other telecom carrier infrastructure, signals a strategic pivot by the majority of operators towards risk-aversion and cost-efficiency.
The findings suggest that static revenue growth and an uncertain industry outlook have led operators to reassess aggressive investment strategies. Stefan Pongratz, Vice President and Analyst at Dell’Oro, noted the contrasting risk appetites across the telecom landscape. While a minority of operators continue to invest heavily in anticipation of future technological shifts, most are opting for conservative capex plans, assuming that market size will remain largely unchanged.
Despite these contractions, Dell’Oro surprisingly projects a stabilisation in 2025. However, this outlook could be challenged by global economic headwinds, particularly escalating tensions around trade policies. The ongoing U.S. trade war has introduced further unpredictability, with recent tariffs on network equipment likely to raise costs and discourage new investment.
In a related blog post, Jimmy Yu of Dell’Oro highlighted how these tariffs could accelerate the trend towards separating hardware and software components in telecom infrastructure, as firms look to avoid systemic cost increases. With negotiations still unfolding, the industry remains in a holding pattern, awaiting clarity on long-term trade relations and policy direction.
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Why it’s important
The decline in telecom operator capex by 8% in 2024 highlights a major transition in how carriers approach infrastructure investment. The conclusion of early 5G rollouts and large-scale fibre deployments has left many operators reconsidering the need for continued high capital intensity, particularly when revenue growth remains flat. This strategic shift toward operational efficiency over expansion could affect how quickly new technologies—such as 6G or edge computing—are adopted.
At the same time, the impact of geopolitical developments—particularly the United States’ implementation of tariffs on telecom equipment—has added uncertainty. Since much of the hardware is manufactured abroad, U.S. buyers are now facing increased costs. This may not only suppress American investment in new network infrastructure but could also influence global pricing trends and vendor relationships.
Dell’Oro’s forecast of a 2% compound annual decline in capex over the next three years, along with a shrinking capex/revenue ratio, signals a long-term recalibration within the sector. If trade hostilities persist or worsen, these forecasts may be rendered obsolete, placing further strain on infrastructure development worldwide.
The industry’s future trajectory now hinges on broader macroeconomic recovery and the outcome of ongoing trade negotiations. Operators, investors, and policymakers alike will be watching closely.
