Telecommunications Network Operators: 3Q23 Market Review Telco topline stages recovery but capex slips further; margins surge amid opex cuts

Telecommunications Network Operators: 3Q23 Market Review Telco topline stages recovery but capex slips further; margins surge amid opex cuts

This report reviews the growth and development of the telecommunications network operator (TNO, or telco) market. The report tracks a wide range of financial stats for 139 telcos across the globe, from 1Q11 through 3Q23. In the annualized 3Q23 period, telcos represented $1.76 trillion (T) in revenues (-3.5% YoY), $257.6 billion (B) in labor costs (-1.2% YoY), and $318.7B in capex (-3.5% YoY). They employed approximately 4.53 million people as of September 2023, down 1.6% from the prior year.

Revenues: Telco topline grew slightly by 0.3% on a YoY basis to post $437.8 B in the latest single quarter ending 3Q23. Revenues for the annualized 3Q23 period were $1,759.4B, down 3.5% YoY over the same period in the previous year.

Capex: Capex spending declined by 7.7% on a YoY basis to post $73.4B in the latest single quarter ending 3Q23. Capex for the annualized 3Q23 period was $318.7B, down 3.5% YoY over the same period in the previous year. At the operator level, five of the top 20 best performing telcos by capex growth in 3Q23 on an annualized basis include Airtel (43.2%), Reliance Jio (37.2%), Charter Communications (30.8%), Comcast (24.9%), and Telefonica (5.1%). By the same criteria, the worst capex growth came from China Unicom (-16.6%), China Mobile (-15.0%), BT (-14.9%), SoftBank (-11.7%), and AT&T (-7.7%) during the same period. Capital intensity is on the downswing: it was 16.8% in 3Q23, from 18.2% the year prior.

Opex and labor costs: Total opex for the telecom industry in the annualized 3Q23 period stood at $1,484.2B, a decrease of 4.7% over 3Q22 on YoY basis. Annualized labor costs per employee grew slightly to $56.6K in 3Q23 compared to $56.2K the prior quarter.

Profitability margins: Both EBITDA and EBIT margins witnessed an uptick in the annualized 3Q23 period compared to 2Q23

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