World Network Operator Market Report 2022: Actuals for 2011-2021, Impacts of COVID-19 and Projections through 2027

DUBLIN, Feb. 14, 2023 /PRNewswire/ -- The "Network Operator Forecast Through 2027" report has been added to  ResearchAndMarkets.com's offering.

This forecast spreadsheet details the publisher's forecast for revenues, capex, headcount, and other metrics across three segments of network operators: telecom operators (telcos), webscale network operators (webscalers), and carrier-neutral operators (CNNOs). The spreadsheet provides 2011-21 actuals and projections through 2027, 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 $4,121 billion (B) in 2021, and will grow to $5,755B by 2027. Three segment capex ended 2021 at $536B, and will likely hit $646B in 2027. Most of the growth is from webscale. In 2011, webscale was less than 10% of capex, but had grown to 33.2% in 2021 and will progress upwards to over 41% by 2027. Telco capital intensity peaks in 2022 at 18% in 2022 and heads towards a bit more than 16% by 2027. Webscale capital intensity averages around 8% for the forecast period, with a big piece of the near-term upside coming from Meta/Facebook. Capital intensity is highest in carrier-neutral, as usual, well over 30% for the whole forecast period.

Headcount across the three operator segments has grown dramatically in the last decade, from 6.48 million in 2011 to 8.86M in 2021; it's likely to hit 10.2 million by 2027. Nearly all of the growth is from webscale, with a good portion of this growth on webscale's ecommerce side (e.g. Amazon, Alibaba, and JD.COM).

Revenue per employee is highest in carrier-neutral, and will see the fastest growth during the forecast as data center-focused CNNO companies account for more growth. Telcos, though, will also grow revenue per employee from about $405K in 2021 to $492K as they learn how to do more with less, implementing automation across their operations.

Macro trends shaping forecast

This forecast was last updated in mid-June 2022. Since then, COVID-19 worries have continued to subside. Vaccination rates are high in most countries, newer strains are less severe, and death and serious illness are less common. COVID-19 clearly left a lasting impact on the globe, in terms of the loss of life, most important, as well as (hopefully) a wider understanding of the risks of viral outbreaks. It's not clear yet whether societies are any more willing to invest up front to prevent the outbreaks.

COVID-19 also accelerated trends already underway, giving a boost to virtual work and school, and encouraged enterprises to speed up their digital transformation efforts. That gave cloud providers - including the key players tracked in our webscale segment - the confidence to speed up their network investments.

Webscale profits soared during the pandemic

Telcos did not see this same jump. Many did accelerate their cost cutting efforts, closing down retail shops and embarking on layoffs. Telco margins ticked up only slightly in 2021, though. Meanwhile, the telco industry has jumped into rapid deployment of 5G networks in most of the world. Despite vendors' promise that this upgrade would be mostly about software, and involve less capex than before, telco capital intensity has approached 18% over the last two quarters. That's even higher than the LTE buildout's peak.

The context for this is war in Europe, high inflation rates worldwide, and high interest rates. Putin's war on Ukraine drags on, causing death and destruction and worsening the inflationary environment. Energy prices are especially impacted; the US CPI for energy increased 13.1% for the year ended November 2022. Energy costs are significant for network operators, putting pressure on costs and hence margins.

As inflation has spread in 2022, governments have responded with higher interest rates. The fed funds rate in the US is now 4.5%, the highest level since late 2007, and additional increases are likely (Dec. 14: "The Committee anticipates that ongoing increases in the target range will be appropriate ."). While these rates are well below pre-2000 averages, increased interest rates do make it harder for operators to fund investment projects, and make it tougher for their customers to pay the bills.

The supply side is also in flux. Key operators continue to cite shortages of key components and chips needed to build out their networks, and in some cases labor shortages impacting the pace of network deployment. Shortages mean delays, and often higher costs for a given product or service. Huawei is also relevant. Huawei continues to be locked out of many overseas markets, more so than a year ago. That creates opportunities for other vendors in the "Huawei displacement" area, but also likely increases the costs of some projects.

Finally, while COVID is not a primary factor in business nowadays, it has impacted China in a big way in 2022. The government's zero COVID policy has complicated life for residents, caused shutdowns, and slowed down manufacturing. That worsens the supply chain issue in the short term, and in the longer term will further entice operators and vendors to seek out alternate sources of supply.

Key sections include:

1. Abstract
2. Total Network Operator Market Projections
3. TNO Projections
4. TNO Regional Split Projections
5. WNO Projections
6. CNNO Projections
7. Top spenders - spending outlook
8. About

For more information about this report visit https://www.researchandmarkets.com/r/51551s-operator?w=5

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