Network Operator Forecast Through 2028 After 2023 dip, capex will bounce back, growing to reach ~$650B by 2028; GenAI will drive both capex and job cuts

Network Operator Forecast Through 2028 After 2023 dip, capex will bounce back, growing to reach ~$650B by 2028; GenAI will drive both capex and job cuts

This forecast report presents our latest projections for the network operator market, spanning telecommunications operators (telcos), webscalers, and carrier-neutral network operators (CNNOs). The forecast is based on our quarterly coverage of over 175 operators. Our forecast includes revenues, capex and employee totals for all segments, and additional metrics for each individual segment. In 2024, we expect the three operator groups to account for $4.38 trillion (T) in revenues (2022: $4.11T), $552 billion (B) in capex (2022: $563B), and 8.71 million (M) employees (2022: 8.88M). This report provides 2011-22 actuals and projections through 2028, and includes projections from past forecasts for reference.

Top line quantitative results

Revenues from the aggregate of our three segments – telco, webscale, and carrier-neutral – were $4,109 billion (B) in 2022, and will grow to $5,344B by 2028. Three segment capex ended 2022 at $563B, will fall to ~$550B for both 2023 and 2024, then grow to $662B in 2028. Webscale capex has flattened recently but over the longer timeframe this sector accounts for most network operator growth. In 2011, webscale was less than 10% of capex, but exceeded 36% in 2022 and will be over 43% by 2028. CNNOs will represent 7% of 2028 capex, a bit more than today, while telcos will capture just under 50% of expected 2028 network operator capex. In capital intensity terms, the all-operator average was 13.7% in 2022 but that will be just 12.4% in 2028. That’s largely because of telcos: their annualized capital intensity peaked at 18.7% in 1Q23 and has begun to come down rapidly, now that most 5G networks are built. That will start to come back in 2027 and hit 17.1% in 2028. Webscalers also saw an all-time high capital intensity in 2022, of 9.1%, which is now easing. The portion of webscalers’ capex spent on the network is rising, though, as operators fill up existing data centers. Capital intensity is highest in carrier-neutral, as usual, well over 30% for the whole forecast period.

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