The telecom infrastructure services (TIS) market declined 0.3% year-on-year to $96.2 billion in 2016 and is expected to continue declining until 2020, at which time 5G deployments will return the market to growth, according to Technology Business Research (TBR).
The TIS market has entered a challenging period for the next three years as mobile broadband investment declines, legacy infrastructure is increasingly decommissioned and NFV/SDN reduces demand for product-attached services, said TBR Telecom Senior Analyst Chris Antlitz.
“The next major market growth catalyst on the horizon is 5G, but that will predominantly be a post-2020 story. In the interim, operators and vendors will be under pressure to engage in more consolidation to protect the revenue and profit pools of their traditional businesses while diversifying into new areas,” he said.
According to TBR’s Telecom Infrastructure Services Global Market Forecast 2016-2021, professional services will be the fastest-growing services segment through 2021, driven by operators’ need to pursue operations and business transformation. Product-attached services (i.e., deployment and maintenance) spend will decline through the forecast period as mobile broadband deployments slow, legacy infrastructure is decommissioned, and cost savings from NFV, SDN and cloud are realized.
Demand for managed services will remain robust, but new large-scale managed network operations deals are becoming more difficult to find, TBR says. Vendors have also become more discerning from a margin perspective on what deals they will take on, limiting market growth.
Market CAGR will be negative in all three primary regions (Americas, EMEA and APAC) from 2016 to 2021, but there will be pockets of growth in some subregions (including CALA, India, and select countries in Southeast Asia and the Middle East & Africa) as late adopters of LTE pursue build-outs.
Market share will concentrate increasingly around the largest TIS suppliers as they engage in M&A to boost capabilities, primarily in software and professional services, and offset the impact of NFV, SDN and cloud.