Huawei and Ericsson grow share of declining RAN market

New data from Dell'Oro shows that worldwide RAN revenues are tracking below expectations, falling by between 10% and 20% year-on-year in the first nine months of 2024.

The market fell – by an unspecified amount – in the third quarter, making it the sixth consecutive three-month period of year-on-year decline, the analyst firm said.

The announcement comes as little surprise. Dell'Oro has been painting a gloomy picture of the global RAN market all year. Things may be worse than it had expected, but we didn't exactly have high hopes in the first place.

And it's not just about overall spending.

"Tougher comparisons, excess capacity, monetization challenges, and capex fatigue negatively affect both capex levels and investment priorities, providing operators with an opportunity to calibrate their RAN budgets to better align with historical capital intensity and RAN/capex ratios," said Stefan Pongratz, Vice President of RAN and Telecom Capex research at the Dell'Oro Group.

"So, the problem is not just lower capex levels. Operators are also adjusting the proportion of the capex allocated for RAN," he explained.

The market is set to improve somewhat next year, but again, not as much as those involved had hoped. Dell'Oro is sticking to its prediction of a low single-digit growth rate in 2025, which is clearly better than a contraction, but it has revised down its forecast for overall revenues to reflect the lower starting point that this year's poor show will create. We're not privy to the actual numbers, but it's the trend that's important here.

The market is far from homogeneous; there are significant regional differences at play. And that will continue into next year. Indeed, summing up 2024, Dell'Oro noted that while RAN market conditions are slowly improving, they remain challenging largely due to the impact of regional imbalances.

Growth in North America and the Asia Pacific region, excluding China, will keep the market moving next year, the analyst firm noted.

The impact of that growth across the pond and elsewhere could be seen in recent quarterly results announcements from Ericsson and Nokia.

Ericsson's Networks segment in North America accounted for over 14% of all sales in the three months to the end of September at around US$1.2 billion. While the company itself was relatively tight-lipped on the impact of that much-hyped AT&T deal from late 2023, industry watchers around the world drew their own conclusions.

Nokia, meanwhile, which lost out when AT&T changed supplier, turned in a weaker set of quarterlies and seems to be bringing in way less business from North America than its arch-rival. However, it talked up mobile network contract wins in Japan, India, New Zealand, and Vietnam in Q3.

Ericsson was the leading vendor worldwide – excluding China – based on RAN revenues in the first three quarters of the year, but with China factored in Huawei took the crown.

That's down to its size though, rather than being anything to do with growth. The Chinese RAN market will decline this year and remain on a negative trajectory in 2025, Dell'Oro believes.

That's clearly not great news for Huawei, or indeed any vendor with a foothold in China. Nonetheless, Huawei and Ericsson were the only two kit makers to increase their share of the worldwide RAN market in the first three quarters of the year, at the expense of Nokia, Samsung and ZTE.

A weak market affects all players, but some can still find growth, in share if not in absolute terms.