"Digitalisation and 5G will be the key drivers of telecoms capex growth in the 2020s, but they need to be more closely aligned to maximise the return on investment."
It will take a long time for communications service provider (CSP) capex levels to recover following their decline in 2016, and they will not reach the 15-year peak from 2015 during the forecast period. Wireless networks are increasingly driving capex because the most intensive period of FTTx build-out will be ending just as 5G is starting to take off. The sharp fall in FTTx spending in the 2020s will only be partially offset by other wireline investments such as long-haul and cloud. Non-CSPs are gradually coming into play, are introducing new patterns of investment and, sometimes, are co-investing with CSPs.
This is the first comprehensive forecast of every aspect of telecoms operator capex and it provides an invaluable analysis of the key capex trends for operators, vendors and investors, at a time when spending on fibre, wireless and digital technology are increasingly co-dependent.
The report provides:
- a detailed breakdown of CSP capex to 2025, well into the early 5G era
- an in-depth view of how 5G, as well as related developments such as virtualisation and automation, will affect the patterns of investment
- capex envelopes for six different CSP profiles with very different spending priorities
- capex forecasts broken down by 7 regions plus China, and by 10 categories of spending including access, core, IT, infrastructure, digital and non-network assets.
Key Questions Answered in this Report
- How will the level of capex be affected by changes to CSPs’ networks and business models, including those related to 5G, expanding FTTx, software-based networks, new enterprises and wholesale models? Which elements of CSP capex will decline by 2025, and will there be new areas that are attracting increased investment?
- How will CSPs reduce capex by sharing investment with third parties, divesting assets or relying on a wholesale, opex-driven approach?
- How will the global industry be affected by the entry of new CSPs with new approaches to investment, or by the participation of non-CSPs in the value chain?
Who Should Read this Report
- Vendor strategy teams that need to understand where growth is slowing and where it is increasing across different categories.
- CSPs that want to understand how their capex strategies align with the wider industry, and learn from the priorities of others.
- CSPs that are planning network and digital transformation journeys and want to identify the key areas of investment.
- Other investors in telecoms services such as large enterprise integrators and cloud providers.
- Neutral host deployers such as towercos and wholesale fibre operators.
7. Executive summary
8. Executive summary: 5G spending will offset the decline in FTTx capex from 2019 onwards; digital infrastructure and new entrants will also drive capex growth
9. General capex trends
10. Capex will grow slowly during the forecast period and will not reach the peak seen in 2015, mainly because of the slow down in FTTx spending
11. Capex growth will mainly be driven by the select group of CSPs that is focused on 5G or digital transformation; some of these CSPs will be new entrants
12. Fixed CSPs' capex intensity will drop as they make use of existing FTTx networks, but MNOs face high capex intensity until 5G equipment costs fall after 2024
13. Mobile and 5G
14. Mobile will be the main driver of capex due to the expansion of 4G and the deployment of 5G, both of which will require investment in more than the RAN
15. The impact of 5G on capex will be limited before 2023 and will mainly affect infrastructure; after that, 5G capex will increase and will overtake that for 4G
16. 5G roll-outs are not as closely aligned to digital investments as previously expected; 5G capex growth until 2023 will therefore be slower than anticipated
17. 5G will lead to an increase in spectrum demand from 2018-2022, although the shift in focus to high-capacity bands and the rise in sharing will limit price inflation
18. Key trends for fixed networks
19. FTTx spending is now in decline having peaked in 2016, though new overbuilds could be enabled by higher levels of infrastructure sharing
20. Long-haul lines, core upgrades and digital investments will keep fixed-line capex stable as FTTX spending slows down
21. Cablecos will reduce their capex more effectively than other fixed-centric CSPs, and will invest in digital platforms to diversify revenue and reduce CPE cost
22. EMAP will be the only region with double-digit fixed-line capex growth; China and DVAP will see sharp declines but Western Europe will be resilient
23. Areas of growth for CSP capex
24. The main driver of capex growth will be the migration to digital infrastructure and not solely 5G, though the RAN will remain the largest outlay in the CSP business
25. The RAN share of mobile capex will decline, but the absolute spending on the RAN will not, thereby diminishing MNOs' hopes of a new low-cost 5G architecture
26. There will be a significant change in IT capex patterns in order to support the gradual migration of networks towards virtualisation, white boxes and software
27. CSPs will gradually make use of digital infrastructure to transform their networks; this will account for the biggest growth in network spending from 2021
28. The capex/opex ratio will shift towards opex as CSPs look for capex savings through sharing and outsourcing
29. Profiles of CSPs that will drive capex
30. There are six types of CSP, each with a distinctive capex profile, and they will adopt different patterns of investment as their business models diversify
31. There are four main investment strategies with varying levels of risk, and CSPs' choices will determine how aggressively they will adopt digital transformation
32. Fixed CSPs in emerging markets will grow their spending from a small base, but others will keep work to stabilise or reduce capex
33. Integrated CSP account for the bulk of capex, but they are looking to use their assets to support new revenue streams and improve capex intensity
34. Integrated and mobile CSPs in developed markets will commit heavily to mobile network build-outs; fixed CSPs will shift spending to IT and digital infrastructure
35. Fixed CSPs in emerging markets will shift their capex to IT and digital platforms to improve agility, but for mobile networks will dominate capex for other players
36. Fixed and infrastructure capex will decline sharply in China once it is 5G-ready; virtualised mobile platforms will dominate capex from 2020
37. Non-traditional telecoms investors will play an increasing role in telecoms markets, and their capex will increase by 25%
38. Co-investment and asset sharing will start to change capex patterns and increase efficiencies for established CSPs
39. About the author
List of figures
Figure 1: CSP capex for three key growth areas and total CSP capex, 2017--2025
Figure 2: Total telecoms capex spending, worldwide, 2010--2025
Figure 3: CSP capex, fixed and mobile, worldwide, 2017--2025
Figure 4: Capex by non-traditional CSPs (excluding towercos), fixed and mobile, worldwide, 2017--2025
Figure 5: Capex/revenue ratio for CSPs (excluding OTT and UTF), worldwide, 2017--2025
Figure 6: Mobile capex in developed markets, 2017--2025
Figure 7: Mobile capex in emerging markets, 2017--2025
Figure 8: FTTx capex allocated to 5G, 2017--2025
Figure 9: Mobile capex allocated to 5G, 2017--2025
Figure 10: RAN capex, 5G and other radio technologies, 2017--2025
Figure 11: Virtualised and conventional mobile network capex for RAN, core and transport, 2021
Figure 12: Virtualised and conventional mobile network capex for RAN, core and transport, 2025
Figure 13: Normalised value per MHz/pop for C-band spectrum, in auctions since 2017
Figure 14: Annualised capex for spectrum licences (excluding annual fees), worldwide, 2017--2025
Figure 15: FTTx capex, access and infrastructure, 2017--2025
Figure 16: Fixed access capex, by technology, 2017--2025
Figure 17: Capex for four fixed-line areas, 2017--2025
Figure 18: Total cableco capex, worldwide, 2017--2025
Figure 19: Cumulative capex investment profile, cablecos and other fixed-line CSPs, 2017--2025
Figure 20: Fixed-line capex in developed markets, 2017--2025
Figure 21: Fixed-line capex in emerging markets, 2017--2025
Figure 22: Total CSP capex by investment category, cumulative, 2017--2025
Figure 23: Cumulative mobile capex by category, 2017--2025
Figure 24: Conventional IT and digital infrastructure capex, 2017--2025
Figure 25: IT capex, by category, 2017--2025
Figure 26: Network transformation capex, by category, region and CSP type, 2021
Figure 27: Network transformation capex, by category, region and CSP type, 2025
Figure 28: Opex as a percentage of total network and IT spending by CSPs, 2017--2025
Figure 29: CSPs' targets for mobile networks and IT opex by 2025
Figure 30: Analysys Mason's six CSP profiles
Figure 31: Four alternative investment approaches for CSPs
Figure 32: Total mobile capex, by CSP profile, 2017--2025
Figure 33: Total fixed and mobile capex, by CSP profile, 2017--2025
Figure 34: Total fixed capex, by CSP profile, 2017--2025
Figure 35: The multi-functional roles of fibre in the new access layer
Figure 36: Breakdown of cumulative capex for MNOs in developed markets (%), --2025
Figure 37: Breakdown of cumulative capex for integrated CSPs in developed markets (%), 2017--2025
Figure 38: Breakdown of cumulative capex for fixed CSPs in developed markets (%), 2017--2025
Figure 39: Breakdown of cumulative capex for MNOs in emerging markets (%), --2025
Figure 40: Breakdown of cumulative capex for integrated CSPs in emerging markets (%), 2017--2025
Figure 41: Breakdown of cumulative capex for fixed CSPs in emerging markets (%), 2017--2025
Figure 42: Breakdown of cumulative capex for Chinese CSPs (%), 2017--2025
Figure 43: Capex for fixed, mobile and converged networks, China, 2017--2025
Figure 44: Non-traditional CSP telecoms capex, by player type, worldwide, --2025
Figure 45: Non-traditional CSP fixed network capex, by category, worldwide, --2025
Figure 46: Additional telecoms network capex from industrial co-investment, 2017--2025
Figure 47: Potential routes for co-investment in 5G networks