What's Happening?
The global telecom equipment market has shown signs of recovery in the first half of 2025, following two years of declining investment. According to preliminary data from Dell’Oro Group, aggregate worldwide
revenues across six major segments, including broadband access, microwave and optical transport, mobile core network, radio access network, and service provider router and switch, grew by 4% year-over-year. This rebound was driven by stabilized inventories, favorable currency movements, and easier year-over-year comparisons. The recovery was particularly strong in the EMEA and North American regions, which helped offset weaker conditions in the Asia-Pacific region. Huawei has strengthened its market position, increasing its revenue share by approximately three percentage points since U.S. restrictions began.
Why It's Important?
The rebound in the telecom equipment market is significant as it indicates a stabilization in global telecom capital expenditures after a period of decline. This recovery could lead to increased investment and development in telecom infrastructure, particularly in regions like EMEA and North America. Huawei's strengthened position despite U.S. restrictions highlights the company's resilience and ability to maintain growth in active markets. The upward revision of Dell’Oro's short-term outlook suggests optimism for continued growth in telecom equipment revenues, which could benefit suppliers and service providers in the industry.
What's Next?
Following the stronger-than-expected performance in the first half of 2025, Dell’Oro has revised its short-term outlook upward, now expecting total telecom equipment revenues to grow between 2% and 3% in 2025. The investment environment remains challenging, but the stabilization in capital expenditures suggests potential for future growth. By 2029, capex-to-revenue ratios are projected to approach 15%, indicating a more sustainable investment level compared to previous years. Wireless capital intensity is also expected to decrease, reflecting a shift from the high investment levels seen during the 5G rollout.
Beyond the Headlines
The recovery in the telecom equipment market may have broader implications for global connectivity and technological advancement. As regions like EMEA and North America experience growth, there could be increased opportunities for innovation and expansion in telecom services. The shift in market dynamics, with Huawei's continued growth despite restrictions, may also influence competitive strategies among other major players like Ericsson and Nokia.
