Expanding Fiber Footprints and Sustainable Initiatives Drive Network Operator Market: Forecast to 2027
DUBLIN, Aug. 2, 2023 /PRNewswire/ -- The "Network Operator Forecast Through 2027" report has been added to ResearchAndMarkets.com's offering.
This comprehensive forecast spreadsheet provides insights into the revenues, capex, headcount, and other metrics for three segments of network operators: telecom operators (telcos), webscale network operators (webscalers), and carrier-neutral operators (CNNOs).
For the 2023-27 forecast period, capex is expected to total $2,889 billion. Of this new five-year capex total, the splits are: telcos account for 54.5% of the total, webscalers 38.2%, and CNNOs the final 7.3%.
Top line quantitative results
Revenues from the aggregate of the three segments - telco, webscale, and carrier-neutral - were $4,109 billion (B) in 2022, and will grow to $5,052B by 2027. Three-segment capex ended 2022 at $559B, will step up to $577B in 2023, and will likely hit $596B in 2027. Webscale growth eased in 2022 but over the longer timeframe this sector accounts for most network operator growth. In 2011, webscale was less than 10% of capex, but had grown to 36.3% in 2022 and will be about 39% in 2027; CNNOs will represent 8% of 2027 capex, while telcos will constitute about 54%. Telco capital intensity peaked in 2022 at 18.1% amidst 5G buildouts but will end 2027 at about 16.5%. Regional variations will remain; the capex/revenue ratio for US telcos will average to 14.7% in 2023-27, for instance, while India will average 25.1%. Webscale capital intensity averages around 8% for the forecast period; a capex boom at Meta/Facebook has been a big plus in recent quarters, but spending from Microsoft and Alphabet related to AI (including new generative AI platforms) will also lift webscale capex in the next 1-2 years. Capital intensity is highest in carrier-neutral, as usual, well over 30% for the whole forecast period.
Headcount across the three operator segments has grown dramatically in the last decade, from 6.48 million in 2011 to 8.87M in 2022. That is roughly the same as the 2021 figure: telcos accelerated headcount reductions in 2022, and several webscalers announced layoffs. By 2027, headcount will grow to 9.1 million, but this is a sizable drop from the 10.2M expected late last year. Automation and AI efforts will facilitate this more modest headcount expansion. Nearly all future growth is from webscale, with a good portion coming from the ecommerce side (e.g. Amazon, Alibaba, and JD.COM). Revenue per employee is highest in carrier-neutral, and will see the fastest growth during the forecast as data center-focused CNNO companies account for more growth. Telcos, though, will also grow revenue per employee from about $389K in 2022 to $467K in 2027 as they learn how to do more with less, implementing automation across their operations.
Network operator interdependence
The three groups of operators that are tracked pursue a range of different business models, even within segments. Webscale revenue models revolve around a diverse mix of advertising, devices, software, cloud services, and ecommerce. Carrier-neutral providers, to simplify, rent network infrastructure to other businesses. Telcos sell subscription and pay-as-you-go services for communications services, including bandwidth, video, mobility, and enterprise services. There is a huge amount of variety in these discrete market segments. What's more important, though, is that the three segments rely on each other in important ways. Carrier-neutral players get most of their revenues from telcos & webscalers needing to fill gaps in network coverage and accelerate time to market. Telcos rely on CNNOs o lower their cost of operations, and need webscalers to provide services and apps which make their network worth using beyond telephony. Webscalers lack last mile access networks and can only deliver their services to the mass market over telco infrastructure. Webscalers also, despite big capex outlays, can only blanket the globe with data centers by partnering with CNNOs for collocation.
This interdependence will grow. The big cloud providers in the webscale market, for instance, have targeted the telecom vertical and found success; AWS, Azure and GCP combined for about $5.0B in revenues from telcos for the latest annualized period (2Q22-1Q23), up 65% YoY. Telcos are making some big bets on cloud technology as they deploy 5G core networks. Both telcos and webscalers want to provide seamless, resilient network coverage, including at the edge, and can't build it all themselves. As a result, they'll need to scale up their partnerships with carrier-neutral players like Equinix and American Tower/CoreSite. CNNOs are increasingly taking over the "dumb pipe" aspects of the network, and to be competitive and upsell they will integrate assets across fiber, cell tower and data center.
Key findings by network operator type
This forecast includes detailed breakouts for each of the three network operator types.
A selection of companies covered in the report includes:
For more information about this report visit https://www.researchandmarkets.com/r/ml2hzf
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