The global mobile market is currently experiencing a significant contraction in Radio Access Network (RAN) revenues, with industry experts suggesting that this downturn could mark the fastest rate of decline ever witnessed in this sector. Initial excitement surrounding RAN has now given way to challenging market conditions, as evidenced by recent figures from Dell’Oro Group.
The expansion phase of RAN, which had seen an intense growth trajectory from 2017 to 2022, has now faded into the past. RAN revenues managed to stabilize in the previous year, maintaining this stability into the first quarter of 2023. However, market conditions took a sharp turn for the worse in the second quarter, leading to a decline in RAN revenues at a pace not seen in almost seven years. While industry analysts were anticipating a decline, the magnitude of this reversal has taken many by surprise.
Stefan Pongratz, Vice President at Dell’Oro Group, commented on the situation, stating, “It is tempting to point the finger at data traffic patterns, 5G monetization challenges, and the odds stacked against an economy struggling with persistent levels of elevated inflation.” Pongratz emphasized that while these factors are indeed significant, the poor performance in the quarter can be attributed to issues arising in North America. He further explained that alongside the complexities of 5G comparisons, the decline was exacerbated by excess inventory accumulated over the past few years to mitigate supply chain risks.
According to the Dell’Oro Group’s recent report, the leading RAN suppliers for the first quarter of the year were Huawei, Ericsson, Nokia, ZTE, and Samsung. Among these, Nokia held the largest RAN revenue share between 2022 and the first half of 2023. Notably, Huawei’s quarterly RAN share reached its highest level in three years during the second quarter of 2023. The Chinese technology giant’s revenue share for this period outside of North America rivaled the combined figures of Ericsson and Nokia. However, Ericsson and Samsung faced declining RAN revenue shares from 2022 to the first half of 2023.
Unfortunately, the outlook for global RAN revenues remains gloomy for the year, with industry researchers predicting a year-on-year drop. This downturn reflects the ongoing challenges faced by the industry, including shifting data traffic patterns, the complexities of 5G implementation, and broader economic uncertainties.
In conclusion, the global mobile market is witnessing an unprecedented contraction in RAN revenues. The swift decline in RAN revenues, attributed to factors like data traffic patterns and supply chain dynamics, underscores the challenges that the industry is currently grappling with. As major players like Huawei and Nokia navigate these headwinds, the focus remains on adaptation and innovation to steer the sector towards a more prosperous future.
