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Telecom's biggest vendors: 4Q18 edition

  • ID: 4771554
  • Report
  • May 2019
  • Region: Global
  • MTN Consulting, LLC
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Huawei, Nokia and Ericsson lead 2018 Market with 23%, 12%, and 10% Share

FEATURED COMPANIES

  • A10 Networks
  • Anritsu
  • BroadSoft, Inc.
  • Citrix Systems
  • CSG
  • Micron
  • MORE

Overview
We have compiled a database of over 100 vendors selling equipment, software and/or services to telecommunications network operators. For each company, we have estimated sales to telcos, by quarter. Estimates are based on the data sources above, as well as analyst expertise on the company’s business model & vertical market penetration rates. The database has been adjusted for account for M&A, and new entry/exit of vendors from the TNO vertical. The result is an apples-to-apples time series of vendor sales to telcos. This 24 quarter time series allows for analysis of telco spending patterns on technology vendors, as well as the relative market power of these vendors within the vertical.
 
Scope

  • Timeframe covered: 1Q13-4Q18 (January 2013 – December 2018)
  • Vendor coverage: Network equipment providers (NEPs), IT services providers (ITSPs), and Cabling & connectivity vendors (CCVs).
  • Sales tracked: revenues to the TNO vertical, including equipment, software and services.

Abstract
Telecommunications network operators (TNOs, or telcos) spend over $600B per year on publicly reported capital expenditures (capex) and network operating expenses (opex). This spending supports a supply chain of hundreds of vendors across the globe. These companies provide a range of network infrastructure (NI), including equipment, software, services, and connectivity products such as fiber cable. With this report, the author is pleased to launch its quarterly coverage of NI vendor market share.
 
Market showing small signs of growth, but Huawei is a complicating factor
 
In total, NI vendor revenues to the telco vertical amounted to $197.4 billion in 2018, up 1.3% from 2017. That growth is an improvement after a 1.3% decline in sales in 2017. Total vendor revenues in the telco segment amounted to 66% of capex in 2018.
 
The outlook for 2019 is mixed. There is upside from increased 5G spending, but recession warnings are growing. Recessions tend to his telco revenues hard. A slowdown in telco revenues would result in both additional layoffs and a slower growth rate in 5G spending. Partnerships would take longer to get off the ground, M&A would accelerate (and many deals done out of desperation), and new technology adoption rates would slow.
 
A recession is not the only supply chain concern. More important might be Huawei. The vendor has been successful in growing into a dominant force in network infrastructure over the last decade.
 
In 2018, Huawei captured 22.5% of network infrastructure vendor revenues, globally. That’s up from 14.4% in 2013. Many large European and Asian operators have deployed Huawei gear across their networks; some have long-term services contracts; some have made long-term technology commitments to Huawei, including joint R&D. Many of these operators now find themselves over-leveraged to a single vendor.
 
That would be the case even without Huawei’s current legal challenges. Now, many countries are considering a ban on Huawei gear in aspects of their network, such as the 5G core. The US is pushing for a Huawei ban with a number of allies, quietly presenting evidence and warning publicly those who don’t comply. This is not an anomaly due to Trump administration policies. Concerns have been building in many countries for years, both related to Huawei’s intellectual property practices (and alleged violations), and the Chinese vendor’s dependence on its home government. This report does not try to fully assess the Huawei situation. The salient point here is that the dispute is legitimate, and it won’t be resolved quickly.
 
Also, it is not just Huawei. Other Chinese vendors are important as direct suppliers to telcos, including ZTE, Fiberhome, YOFC, Hengtong and Comba. The total of this group accounted for 32% global share in NI, from 21% in 2013. Further, China is important as a manufacturing and R&D base for a broad range of tech companies that sell into the telecom supply chain. That includes chip companies like Broadcom, Intel, Micron, Qualcomm, Skyworks, and TSMC. And Chinese vendors like Huawei continue to be important customers for companies based in the US. Many actors in the market find themselves with divided loyalties about how to proceed.
 
Top 5 capture 55% of market; Samsung and Hengtong are most improved
 
Our market share study tracks 118 vendors in total over a six-year period, 2013-2018. Because of M&A, the number of vendors with sales to telcos varies over time. As of 4Q18, ninety (93) of the 118 tracked companies recorded revenues to telcos.
 
Currently, the top vendor in 2018 global share terms is Huawei (22.5 percent), followed by Nokia (11.8 percent), Ericsson (9.6 percent), Cisco (6.7 percent), and ZTE (4.3 percent). Those Top Five companies have captured 55 percent of the global market. The next five places are held by ARRIS, NEC, Amdocs, Samsung, and Fiberhome.
 
Samsung and Hengtong were the most improved vendors for the year. Samsung’s share grew 0.5 percent to 1.9% on the back of early 5G spending, and China-based fiber optic cable supplier Hengtong’s share rose 0.4% to 1.6% due to overseas sales. Accenture also grew share, from 1.1% in 2017 to 1.3% in 2018. Accenture continues to expand its base of customers with wins in digital transformation and customer experience. Some other big share changes in 2018 relate to M&A transactions, including Infinera-Coriant and Prysmian-General Cable. The biggest share drop by far was at ZTE, whose share dropped 0.5% to 4.3% due to the after-effects of the US Commerce Department’s “ZTE Denial Order” from April 2018. Dozens of other vendors have significant sales to telcos; the smallest three based on 2018 sales are CA Technologies, FireEye, and Radcom. The fastest growth rates in 4Q18 were achieved by Anritsu, Arista, Nexans, Quantenna, and Wiwynn.
 
Virtualization and the cloud are creating opportunities for a wide range of IT/software companies with no network equipment of their own. Often they lack distribution channels or have gaps in their portfolios needed to serve the telco audience, however. Their desire to better serve this market will drive some M&A going forward.

Note: Product cover images may vary from those shown
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FEATURED COMPANIES

  • A10 Networks
  • Anritsu
  • BroadSoft, Inc.
  • Citrix Systems
  • CSG
  • Micron
  • MORE

1. Abstract

2. Market trends

3. Top 20 vendors & share changes in 2018

4. Top 20 vendors: Printable tearsheets

5. Dynamic share charts

6. About

List of Figures & Charts

  • Segment breakouts: NEPs, ITSPs, and CCVs
  • Revenues by HQ country (2018)
  • Vendor sales to telcos vs. telco capex, annualized
  • Top Network Infrastructure Vendors – Telco (2018)
  • Network infrastructure sales to telcos, annual ($M)
  • All vendors, YoY % growth
  • All vendors, YoY % growth in single quarter sales
  • Vendor sales to telcos by company type ($B)
  • YoY % growth in sales to telcos by vendor category
  • Network infrastructure sales to telcos, annual ($M) – NEPs
  • Top Network Infrastructure Vendors – Telco (2018)
  • 2018 share: Top vendors to telecom network operators
  • Biggest share changes in 2018
  • Annualized market share in the telco vertical (last five years)
  • Growth in sales to the telco vertical (YoY % change in 4Q18)
  • Vendor revenues in telco vertical, annualized ($B)
  • Annualized market share in the telco vertical
  • Vendor revenues in telco vertical, annualized ($B)
Note: Product cover images may vary from those shown
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  • A10 Networks
  • Accenture plc
  • Accton Technology
  • ADTRAN
  • ADVA Optical Networking
  • Alcatel-Lucent
  • Allied Telesis
  • Allot Communications
  • Amdocs
  • Anritsu
  • Arista Networks
  • ARRIS International
  • Asia Pacific Wire & Cable
  • Atos Origin
  • Avaya
  • Aviat Networks
  • Beijing Xinwei
  • Broadcom Limited
  • BroadSoft, Inc.
  • Brocade Communications Systems, Inc.
  • CA Technologies
  • Calix
  • Capgemini
  • Casa Systems
  • Ceragon Networks
  • Check Point Software
  • Ciena Corporation
  • Cisco Systems
  • Citrix Systems
  • Clearfield
  • Comba Telecom
  • CommScope Holding
  • Commvault Systems
  • Comptel
  • Comtech Telecommunications Corp.
  • Convergys
  • Coriant
  • Corning
  • CSG
  • Cyan
  • Ericsson
  • Fiberhome
  • FireEye
  • Hengtong
  • Huawei
  • Infinera
  • Intel
  • Micron
  • NEC
  • Nexans
  • Nokia
  • Prysmian-General Cable
  • Qualcomm
  • Quantenna
  • Radcom
  • Samsung
  • Skyworks
  • TSMC
  • Wiwynn
  • YOFC
  • ZTE
Note: Product cover images may vary from those shown
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