Global RAN market continues to stagnate

Telecoms analyst firm Dell’Oro has announced that the 2022 market for Radio Access Network kit came in below expectations.

In common with many analyst firms, Dell’Oro tends to be sparing in the datapoints it publishes with its press releases. It did reveal, however, that four out of the six regions it tracks saw year-on-year RAN market decline in Q4 2022, a continuation of a year-long trend.

“The results in the quarter further validate the reduced growth scenario we have discussed now for some time, reflecting more challenging MBB comparisons in the advanced 5G markets,” said Stefan Pongratz, of Dell’Oro. “At the same time, even if the gap between the early adopters and the laggards is generally smaller with 5G than it was with LTE, the state of 5G still varies significantly across the globe.”

We contacted Rémy Pascal of analyst firm Omdia to see if his research paints a similar picture. “We expect the RAN market size to decrease by 3% to 5% in 2023,” Pascal told us. “There will be positive drivers like growing demand from India and new opportunities such as private networks, but this will not be sufficient to offset the slowdown in the US and China after a few years of massive 5G deployments.

“At global level, 5G RAN revenues are expected to continue growing but in the meantime the demand for 4G will decline dramatically and 2G and 3G are already negligible. Beyond 2023, we expect this downward trend to continue, however we also expect the level of investment to remain relatively high when comparing it to historical levels, and above $40 billion until 2025.

“For at least two years we have expected that the level of investment in 2023 would be lower than in 2022. We see that as the normal cyclicality in this market: a new generation is introduced, followed by a few years of rapid growth leading to a peak, and then years of slower investment until the next generation comes.”

Fair enough, so the current market softness is nothing too out of the ordinary. On the other hand, several years into the 5G cycle returns on investment remain hard to find. You have to wonder whether the 5G kit market would be showing a bit more life if the path to resulting profits was a bit clearer.

UPDATE – 09:30 21/2/23: Added RAN revenue ranking table.

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