Telecommunications Network Operators, 4Q21 Market Review – 10% Jump Propels Capex to Hit Record $326Billion in 2021 – ResearchAndMarkets.com

DUBLIN–(BUSINESS WIRE)–The “Telecommunications Network Operators: 4Q21 Market Review” report has been added to ResearchAndMarkets.com’s offering.

This market review provides a comprehensive assessment of the global telecommunications industry based on financial results through December 2021 (4Q21).

The report tracks revenue, capex and employee for 138 individual telecommunications network operators (TNOs). For a sub-group of 79 large TNOs, the report also assesses labor cost, opex and operating profit trends.

The report also covers annual data for other financial metrics such as debt, cash & short term investments, M&A spend and cash flow from operations for all the 79 companies from the TNO-79 subset. Our coverage timeframe spans 1Q11-4Q21 (44 quarters). The report’s format is Excel.

4Q21 RESULTS SUMMARY

Final quarter decline tapers full-year topline growth to 5.3%

After four growth quarters propelled by a pandemic-induced low base period, non-service revenues, and exchange rate fluctuations, the telecom network operator (telco) market witnessed revenue decline in the latest quarter. For the single quarter 4Q21, telco revenues declined by 1.3% on a YoY basis to post $472 billion (B). Revenues for the full-year 2021, though, were $1,888.3B, up 5.3% YoY, the strongest revenue growth experienced in a decade.

Much of the revenue growth, however, is due to a bounce back from the COVID doldrums. Data from the largest mobile telcos also suggest revenues from non-services (5G handset devices and CPE) contributing to the annual revenue bump. For instance, AT&T’s equipment revenues grew by 18.3% in 2021, but service revenues declined by 4.2%.

10% jump propels capex to hit record $326B in 2021

Single-quarter capex jumped at a robust growth rate of 10% on a YoY basis, totaling $92.5B in 4Q21. Telco investments surged by ~10% YoY for the third successive quarter, as the desire to deploy 5G network capability remained strong. Telcos are spending heavily to upgrade networks to 5G, with a growing number beginning deployment of stand-alone 5G core networks, often relying on collaboration with webscale operators like AWS, Azure and GCP for key functions. Since capex grew faster than revenues in 2021, the market’s capital intensity rose, from 16.5% in 2020 to 17.3% in 2021. This 17.3% is the same as was recorded in 2015, during the peak of the LTE build cycle.

Software-based digital transformation and automation to drive telco profitability

Historically, telcos have maintained stable profitability margins – EBIT margins have been in the range of 13-18% while EBITDA margins have never gone down below 30% since 2011. This trend continues to stretch out into 2021. Operating margins for the full year 2021 stood at 15.1%, up from 14.4% in the prior year. EBITDA margins remained stable at 33.4% in 2021, maintaining the peak level achieved in 2020.

Labor costs as a percentage of opex ex-D&A have been rising again after moderating briefly in the past few quarters, which means they are not directly causing this margin growth. Rather, within the overall telco opex budget, telcos are having success in cutting their sales & marketing and G&A spending, as telcos adjust to working from home and accelerate the migration of sales & support to digital platforms. These efforts accelerated in 2020, as COVID-19 spread and telcos were forced to do business with minimal human intervention, but have continued in 2021.

Industry headcount continues to be on a downward spiral despite rise in labor costs

Telco industry headcount continues to decline, falling to 4.693 million at the end of 2021, down from 4.787 million a year ago. The publisher expects headcount reductions to continue via attrition and voluntary retirement schemes, heading towards 4.5 million by 2025. Even as telcos cut headcount, they recognize how key their workforce is to success. As such they are investing in training programs, and hiring a new generation of highly-skilled employees able to function in the telco of 2022.

Data from 4Q21 verifies that telcos’ average labor costs per employee are rising as telcos make this transition – annualized labor costs per employee increased to $57.6K in 4Q21 from $53.6K in 4Q20. The analyst expects the average telco employee salary to continue rising.

Asia emerges as a bright spot in 2021, but capex growth strongest in the Americas

Regionally, all but Asia were a mixed bag – MEA region topped revenue growth among the four major regions in 4Q21, but was also the only to post declines in capex. Similarly, revenues for Europe and the Americas declined YoY but posted growth in capex in the latest quarter. The Americas region maintained its stronghold as the largest single region (37.6%) on a revenue basis, but Asia is catching up fast with its share trailing by just 1.6 ppts at 36.0% in 4Q21. On a capex basis, the Asia region has been outspending the Americas for many years but the Americas region posted a robust 21.0% YoY capex growth in the latest quarter.

Companies Mentioned

  • A1 Telekom Austria
  • Advanced Info Service (AIS)
  • Airtel
  • Altice Europe
  • Altice USA
  • America Movil
  • AT&T
  • Axiata
  • Axtel
  • Batelco
  • BCE
  • Bezeq Israel
  • Bouygues Telecom
  • BSNL
  • BT
  • Cable ONE, Inc.
  • Cablevision
  • Cell C
  • Cellcom Israel
  • CenturyLink
  • Cequel Communications
  • Charter Communications
  • China Broadcasting Network
  • China Mobile
  • China Telecom
  • China Unicom
  • Chunghwa Telecom
  • Cincinnati Bell
  • CK Hutchison
  • Clearwire
  • Cogeco
  • Com Hem Holding AB
  • Comcast
  • Consolidated Communications
  • Cyfrowy Polsat
  • DEN Networks Limited
  • Deutsche Telekom
  • Digi Communications
  • DirecTV Dish Network
  • Dish TV India Limited
  • DNA Ltd.
  • Du
  • EE
  • Elisa
  • Entel
  • Etisalat
  • Fairpoint Communications
  • Far EasTone Telecommunications Co., Ltd.
  • Frontier Communications
  • Globe Telecom
  • Grupo Clarin
  • Grupo Televisa
  • Hathway Cable & Datacom Limited
  • Idea Cellular Limited
  • Iliad SA
  • KDDI
  • KPN
  • KT
  • Leap Wireless
  • LG Uplus
  • Liberty Global
  • M1
  • Manitoba Telecom Services
  • Maroc Telecom
  • Maxis Berhad
  • Megafon
  • MetroPCS Communications Millicom
  • Mobile Telesystems
  • MTN Group
  • MTNL
  • NTT
  • Oi
  • Omantel Ono
  • Ooredoo Orange
  • PCCW
  • PLDT
  • Proximus
  • Quebecor Telecommunications
  • Rakuten
  • Reliance Communications Limited Reliance Jio
  • Rogers
  • Rostelecom
  • Safaricom Limited
  • Sasktel Shaw
  • Singtel SITI Networks Limited
  • SK Telecom
  • Sky plc SmarTone
  • SoftBank
  • Spark New Zealand Limited
  • Sprint
  • StarHub STC (Saudi Telecom)
  • SureWest Communications
  • Swisscom
  • Taiwan Mobile
  • Tata Communications
  • Tata Teleservices
  • TDC
  • TDS
  • Tele2 AB
  • Telecom Argentina
  • Telecom Egypt
  • Telecom Italia
  • Telefonica
  • Telekom Malaysia Berhad
  • Telenor
  • Telia
  • Telkom Indonesia
  • Telkom SA
  • Telstra
  • Telus
  • Thaicom
  • Time Warner
  • Time Warner Cable
  • TPG Telecom Limited
  • True Corp
  • Turk Telekom
  • Turkcell
  • Veon
  • Verizon
  • Virgin Media
  • Vivendi
  • Vodafone
  • Vodafone Idea Limited
  • VodafoneZiggo
  • Wind Tre
  • Windstream
  • Zain
  • Zain KSA
  • Ziggo

For more information about this report visit https://www.researchandmarkets.com/r/5451xd.

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