What's Happening?
The Dell'Oro Group has reported that global telecom capital expenditures (capex) stabilized in the second quarter of 2025 after two years of reductions. This stabilization comes as telecom operators shift their investment focus from broad coverage to enhancing capacity, quality, automation, and energy efficiency. Despite the stabilization, the first half of 2025 saw a year-over-year decline in capex due to significant reductions in the first quarter. The report highlights that while capex has peaked, it is not expected to collapse, with projections indicating a gradual decline in capex-to-revenue ratios by 2029. The wireless capital intensity is also expected to decrease, reflecting a post-5G normalization. Additionally, the global 5G mobile core network market is projected to grow at a 6% compound annual growth rate from 2024 to 2029, driven by the adoption of 5G standalone architecture.
Why It's Important?
The stabilization of telecom capex is significant for the industry as it indicates a shift in investment strategies that could impact the development and deployment of telecom infrastructure. By focusing on capacity and quality improvements, telecom operators may enhance service delivery and efficiency, potentially benefiting consumers and businesses reliant on robust telecom networks. The projected growth in the 5G mobile core network market underscores the ongoing transition to 5G technology, which is expected to drive innovation and economic growth. However, the challenging investment environment may pose risks to telecom equipment revenues, affecting stakeholders across the supply chain.
What's Next?
As telecom operators continue to adjust their investment strategies, the industry may see further developments in automation and energy-efficient technologies. The focus on capacity and quality could lead to advancements in network performance and customer satisfaction. Additionally, the growth in the 5G mobile core network market may spur further innovation and competition among telecom providers. Stakeholders will likely monitor these trends closely to adapt to the evolving market dynamics and capitalize on emerging opportunities.
