2024년 2분기 설비투자와 전부문 전망 리뷰 : 생성형 AI 버블 - 웹스케일과 캐리어 뉴트럴 설비투자는 각각 전년대비51%와 19%로 증가했으나, 기업의 수익성 안정화에 따라 통신회사의 설비투자는 여전히 감소 경향

This brief report reviews actual capex through June 2024 and the full-year outlook for key companies in three segments of communications network operators: telco, webscale and carrier-neutral.

VISUALS

MTN Consulting tracks communications network operator spending (capex) closely. Each quarter, we publish detailed Excel reviews for the telco & webscale markets. For carrier-neutral, we update our database informally each quarter and publish a detailed review once a year. For all three, we usually publish a market forecast twice a year: around December and around July. This year, our July update was postponed as we believed the market was too volatile to make publication of a new forecast feasible. That turned out to be a good decision. For example, interest rates now appear to be set to fall, which will support more telco capex and also entice some market consolidation (e.g. Verizon-Frontier). That gives more support to the presumption that telco spending will change directions after 2H24. Also, there is more support now for our thesis that GenAI is overly hyped and cannot sustain continued capex spikes.

We now plan to release an update around the end of 3Q24. As part of the update process, we expect to publish a number of shorter reports reviewing various aspects of the forecast. The starting point is a review of actual capex through 2Q24 and the latest guidance from key operators. That is the purpose of this report. As discussed below, webscale capex surged by over 50% YoY in 2Q24, carrier-neutral capex grew by about 20% YoY, but telco capex remains on the decline. That's where it has been for several straight quarters, recording YoY declines in the 5-10% range. The telco weakness is not a shock given the need to ramp down spending post 5G rollouts, and given the flat nature of the telecom industry. Moreover, we have long expected the cloud providers AWS, Azure and GCP to play a much larger role in telco networks, eventually. That is starting to happen as the cloud providers blend their solutions with more traditional telco vendors like Amdocs and Ericsson. For AWS, Azure and GCP, their combined sales to telcos now exceed $2B per quarter, from about $1B per quarter two years ago. This enables capex reductions.

Other topics we plan to address in the coming weeks include: labor costs & automation; data center spending & supply chain dynamics; shifting vendor landscape & implications for spending patterns; and wildcard topics, such as China starting a war, Trump winning, and India emerging as real player in tech supply chains.

COVERAGE:

Organizations mentioned:

Table of Contents

Summary

Capex results & outlook for key operators

• Webscale capex climbs 51% YoY in 2Q24
• Carrier-neutral capex up by 19% YoY in 2Q24
• Telco capex continued declining at a 5-10% YoY rate in 2Q24

Appendix

Figures:

• Figure 1: YoY % change in annualized capex for key webscalers, 2Q24
• Figure 2: Annualized capex for key CNNOs in 2Q24, YoY % change
• Figure 3: YoY % change in annualized telco capex, 2Q24 versus 2Q23