5G will drive global infrastructure revenues up $25B by 2022, IHS forecasts

The analysts at Macquarie Capital predict that the four nationwide wireless operators in the United States collectively will increase their network capex to a total of $37 billion by 2020. (Image: Macquarie Capital)

According to new research, the worldwide market for network equipment expanded by 15% in the fourth quarter of last year—and revenues in the space are set to grow by $25 billion over the course of the next five years.

“When including 5G in the forecast, 2G/3G/4G/5G hardware revenue is anticipated to increase to $25 billion by 2022, with a five-year CAGR of -7.8%,” research firm IHS Markit wrote in a release issued this morning. “5G hardware revenue is expected to reach $11 billion in 2022, starting from a very low base of early adopters in the U.S. in the second half of 2018, followed in 2019 by South Korea and China’s massive trial that will generate revenue for vendors.”

Indeed, the firm said vendors across the globe are already starting to see an uptick in sales based on revenues generated in the fourth quarter. The firm said global mobile infrastructure sales during the final three months of the year were driven up by previous year-end loaded projects in various spots, including China and India, and the completion of other expansion projects in North America. However, the firm said the 15% sequential growth in the fourth quarter wasn’t enough to bring the space back up to its high point—IHS said the market overall in the fourth quarter was still down 10% year-over-year and 14% for the full-year 2017.

“All of this confirms we are now in the second year of the post-LTE peak era,” said IHS’ Stéphane Téral, executive director of the firm’s mobile infrastructure and carrier economics research, in a statement.

Specifically, the firm said revenues from global 2G/3G/LTE macro hardware sales reached $37.2 billion last year, down 14% from $43.3 billion in 2016.

Ericsson, Nokia and Huawei are the world’s leading suppliers of mobile network equipment, and their 2017 financials largely reflected this downturn. Ericsson, for example, reported that its sales decreased by 12% in the fourth quarter, with sales decreasing by 10% for the full year 2017 in all segments. Its net loss was $2.4 billion for the fourth quarter.

But all eyes now are watching 5G on the horizon, with the expectation that carriers across the globe are preparing to loosen their purse strings in order to upgrade their networks.

"We see a massive surge in 5G coming in China below 5 GHz," said Mobile Experts analyst (and FierceWireless contributor) Kyung Mun in a recent release from the firm titled “The 5G Volcano is Rumbling…It's About to Erupt.”

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Added Mun: "It will be followed by a more incremental rise in other countries around the world. Using our GkM traffic density model and some rigorous ROI analysis, we have demonstrated just how this will happen, and where the growth of 5G will be dissimilar to LTE."

Indeed, carriers in the United States have already signaled their plans to begin spending more heavily on their networks. For example, the analysts at Deutsche Bank Research recently said that U.S. nationwide wireless carriers are expected to increase their overall capex in 2018 by 14% over last year to $30.5 billion, which the analysts noted is the biggest capex figure they’ve seen since 2014.