Industry rides mobile core rollercoaster as growth plummets

So says Dell’Oro, which has not published actual market figures, but shared its view on growth patterns over the past few years. The third quarter of this year was the weakest in growth terms since the fourth quarter of 2017, the analyst firm said.

The data arguably comes as a bit of a shock, given that it follows a strong second quarter. Q2 showed the highest growth rate since the first quarter of 2021, the firm noted.

Funnily enough, with numbers like that, Dell’Oro described the mobile core network market as “erratic” and “on a roller coaster ride,” Q3 bringing a big dip.

For many people, the most fun part of a roller coaster is the big dip, but clearly that is not the case for telecoms equipment makers keen to flog their wares to the operator community. Incidentally, Huawei was the leading mobile core network vendor in Q3, followed by Ericsson, Nokia and ZTE, but again, Dell’Oro did not supply any actual figures to give us an idea of market shares.

“Many vendors state that the market is volatile, attributing this phenomenon to macroeconomic conditions such as the fear of higher inflation rates, unfavourable currency foreign exchange rates, and the geopolitical climate,” said Dave Bolan, Research Director at Dell’Oro Group.

But there is another reason for this up-and-down growth pattern: 5G standalone. Essentially, telecoms operators have been much slower in rolling out standalone 5G networks than most people in the industry expected.

In addition to subscriber growth in general, a major growth driver for the mobile core network market is the move to 5G standalone, because it uses a 5G core, Dell’Oro noted. But operators are still launching many more non-standalone 5G networks than standalone, and the pace of deployment for 5G SA has really slowed: last year saw the launch of 17 5G SA networks, but the figure has fallen to seven so far in 2023.

Dell’Oro is not the only firm highlighting disappointing 5G SA growth. In August the Global mobile Suppliers Association (GSA) shared Q2 figures that showed just 36 operators worldwide has launched public 5G SA networks, including two soft launches, by the end of June, an increase of just one on the previous quarter.

In total, the GSA said that 115 operators in 52 countries had invested in public 5G SA networks – that includes actual deployments as well as planned rollouts and trials – by the end of Q2, with no new names added during the quarter, and an increase of just three on the end of 2022.

Dell’Oro’s records show that two new mobile network operators launched commercial 5G SA networks in the third quarter of this year: Telefonica O2 in Germany and Etisalat in the United Arab Emirates. And yet, the weakest performing regions in Q3 in the overall mobile network core market were EMEA and China, both having been among the strongest regions in the previous quarter. That said, there is of course a gap between operator equipment spend and commercial rollout.

All in all though, like the GSA, Dell’Oro is relatively upbeat about the future of 5G SA.

“We expect more 5G SA networks to be deployed in 2024 than in 2023, and we expect 2024’s market performance to be better than 2023,” said Bolan.

And that will presumably have a knock-on effect on the overall mobile core network space.