Long-term RAN market conditions ‘remain subdued’Long-term RAN market conditions ‘remain subdued’

The analyst says that while market conditions for the RAN ecosystem are improving, they remain ‘underwhelming’ as regional 5G coverage imbalances, slower data traffic growth, and monetisation challenges are providing drag factors to sales.

There was an ‘intense’ 5G acceleration phase from 2017 to 2021, says the firm, but RAN investments tapered off in 2023 and 2024. Conditions are expected to improve somewhat over the short term, but the long-term outlook ‘remains subdued.’

More specifically, worldwide RAN revenues are projected to grow at a 0% CAGR over the next five years, as ‘rapidly declining’ LTE revenues offset investments in 5G.

The report also says as investment focus gradually shifts from coverage to capacity, one of the most significant forecast risks is slowing mobile data traffic growth. Given current network utilisation levels and data traffic trends in more advanced markets, “there are serious concerns about the timing of capacity upgrades.”

While public RAN investments decline, on the upside private/enterprise RAN is expected to grow at a 20% plus CAGR. However this is thin gruel for kit vendors – Dell’Oro adds that because of the lower starting point, it will take “some time for private RAN to move the broader RAN needle.”

The firm does not expect that 5G-Advanced will fuel another major capex cycle, with operators instead transitioning their spending from 5G over to 5G-Advanced. Meanwhile RAN segments such as 5G NR, FWA, mmWave, Open RAN, vRAN, private wireless, and small cells are expected to grow over the next five years.

“The underlying message we have communicated for some time has not changed,” said Stefan Pongratz, Vice President for RAN market research at Dell’Oro Group. “Regional imbalances will impact the market dynamics over the short term while the long-term trajectory remains flat. This is predicated on the assumption that new RAN revenue streams from private wireless and FWA, taken together with MBB-based capacity growth, are not enough to offset slower MBB coverage-based capex.”  

In August Dell’Oro published a report which observed ‘revenues dropping at a double-digit rate year-over-year for the fourth consecutive quarter,’ but saw signs that we may be past the worst of the telecoms recession – pointing specifically to North America which had returned to strong growth and China as solid, but the rest of APAC, especially India, dragged global growth down.

Meanwhile Dell'Oro numbers from late last year pointed to a nosedive for Open RAN in the first nine months of 2024, claiming a 30% year-on-year drop, primarily due to muted activity in the US and Japanese 5G markets – so there seems to be a little more cause for optimism on that front in this latest report which pointed to growth over the next 5 years for OpenRAN.

All in all, its not a new song – the RAN market hasn’t been growing for some time now. Back in 2023 the analyst was pointing to uncertainties in the market, but claimed after the peak in 2021, it would continue to trend downward before picking up momentum in the latter part of the decade. The bottom line is the RAN market forecasts are flat as a pancake for the foreseeable.