Capex Forecast Check, 3Q23: Telco Spending Slips

This comment provides an early review of 3Q23 market growth and spending metrics for the telecommunications operator (telco) market. The latest forecast called for $320B of telco capex in 2023, down only slightly from the $328B recorded in 2022. Early 3Q23 revenue reports from vendors selling into the telco market call this forecast into question. The dip in the Americas is worse than expected, and Asia’s expected 2023 growth has not materialized.

Key vendors are reporting significant YoY drops in revenue, pointing to inventory corrections, macroeconomic uncertainty (interest rates, in particular), and weaker telco spending. Network infrastructure sales to telcos (Telco NI) for key vendors Ericsson and Nokia dropped 11% and 16% YoY in 3Q23, respectively, measured in US dollars. By the same metric, NEC, Fujitsu, and Samsung saw +1%, -52%, and -41% YoY growth; Adtran, Casa, and Juniper declined 29%, 7%, and 20%; fiber-centric vendors Clearfield, Corning, CommScope, and Prysmian all saw double-digit declines. The publisher will update its operator forecast formally next month. In advance, this comment flags a weaker spending outlook than expected. Telco capex for 2023 is likely to come in around $300-$ 310B.