Adieu 2021!

The telecom equipment industry continues to be dominated by a handful of companies. Together seven vendors captured 80 percent of the USD 100-billion global market in the 9M 2021 period, with Huawei dominating with a 29-percent market share, and Nokia and Ericsson each with 15-percent share of total revenues.

The telecom industry is entering a new phase, and faces a new set of challenges. While increased CapEx across the globe is being seen by most telecom companies, telcos and their vendors are transitioning to the fundamentally new network architecture, which is software-based, fully virtualized, and cloud-centric. The telcos also need to determine where they will play in the new value chains that are being created in the digital economy, most notably in hyper-scalers’ marketplaces, and in conjunction with new players that are entering the scene in domains, such as private networks and satellites.

The telcos are already forging partnerships across the value chain, including web-scalers, technology players, original-equipment manufacturers, and working with enterprise clients across sectors, including manufacturing, logistics, and healthcare, to test 5G-based solutions. They are the lead partners in just 16 percent of the 600+ enterprise 5G projects, identified globally up to and including Q1 2021, down from 21 percent a year earlier, according to a research, based on an Omdia’s study. That decline comes in a market, in which the number of enterprise 5G projects doubled during the 12 months to the end of March 2021. And, alternative service providers, such as private network specialists, have ramped up their efforts and are outpacing telcos, scooping up the lead-partner role in 27 percent of enterprise 5G projects, a figure that represents significant growth from 7 percent a year earlier.

Meanwhile, supply chain challenges are expected to persist through 2022, with continuing semiconductor and component shortages as well as ongoing skilled labor shortages and shipping delays, all of which threaten to delay market development and hinder vendors’ ability to recognize revenue and pursue new growth opportunities. Inflation, potentially stagflation, and rising interest rates also pose risks, portending margin pressure and debt-refinancing challenges.

Taken together, these circumstances indicate 2022 will be an unusual year for the telecom industry.