Mobile telecom service provider global infrastructure investment in 2016 was not what vendors had anticipated. But there were pockets of growth that in a few key markets where mobile internet demand had fueled local expansion.
According to the latest worldwide market study by IHS Markit, during the fourth quarter (Q4) of 2016, the global macrocell mobile infrastructure market totaled $11 billion, rising 7 percent sequentially, driven by strong activity in a few Asian countries such as India, Myanmar and Vietnam.
Mobile Infrastructure Market Development
On a year-over-year basis, the overall market declined 14 percent, dragged down by all regions -- essentially confirming that the mobile infrastructure market has entered the post-LTE-peak era.
4G LTE was somewhat of a bright spot -- up 6 percent quarter-over-quarter driven by E-UTRAN (evolved UMTS terrestrial radio access networks) -- but down 16 percent year-over-year.
2G or 3G infrastructure spending was up 10 percent sequentially, somewhat kept alive by wideband code division multiple access (W-CDMA) demand in Japan.
But none of this was enough to save the year for the mobile communication infrastructure vendors.
Looking at the full-year 2016, worldwide mobile infrastructure revenue totaled $43 billion, falling 10 percent from the $48 billion in 2015 -- with China reported to be leading the overall decline.
Revenue for the software that goes with 2G, 3G and 4G mobile networks grew just 2 percent in 2016 from 2015, to $15.5 billion, mostly driven by LTE-A (LTE-Advanced) upgrades.
In the battle for market share, Ericsson, Huawei and Nokia nabbed the top three spots in 2016. That said, according to the IHS Markit assessment, the Chinese vendors were negatively impacted by the decline in China, a market where they are the most exposed.
Outlook for New Infrastructure Investment
As of January 30, 2017, 581 total commercial LTE networks have been launched. All indicators point to a year of 4G LTE decline in 2017 as a result of diminishing new service rollouts worldwide.
Moreover, IHS Markit forecasts the LTE market to decline at a compound annual growth rate (CAGR) of -12.4 percent from 2016 to 2021, sinking to $12 billion from its peak of $25.9 billion in 2015.
Besides, early 5G rollouts won't be enough to push the overall market back into growth territory, although by 2021 5G mobile infrastructure is projected to be a multi-billion dollar market worldwide.