VoLTE equipment revenue dipped 9% quarter-over-quarter and 15% year-on-year in Q2 2018, mainly due to the US supplier ban imposed on ZTE, according to a recently published report from Dell’Oro Group.
Without the ZTE ban, 2Q18 would have had a positive quarter-over-quarter growth, the report says. Nokia Huawei, and Ericsson – which together account for 70% of the global VoLTE equipment market – all had positive quarter-to-quarter growth for Q218, said David Bolan, senior analyst at Dell’Oro.
“With end-to-end solutions, Nokia, Huawei, and Ericsson grew quarter-over-quarter increasing their combined market share and leaving little room for other vendors,” Bolan, said. “The VoLTE market would have increased quarter-over-quarter in 2Q 2018 if the US ban on ZTE had not been in effect. For 2018 the market is expected to be slightly below 2017, but will return to growth in 2019.”
An earlier Dell’Oro report found that the ZTE supplier ban was also the chief cause of a decline in optical transport equipment revenues in the same quarter.
The fundamentals of the VoLTE market are still positive and the penetration rate of VoLTE continues to grow. In mature LTE markets, some carriers are beginning to approach a 100% VoLTE subscription rate. Verizon, for example will reach this point when they turn off their CDMA network at the end of 2019.
In low-cost markets dominated by pre-paid customers with feature phones, VoLTE phones had been financially out of the reach of subscribers. But this is changing quickly, as Reliance Jio has demonstrated in India, with their introduction earlier this year of a low cost VoLTE feature-phone targeting the low cost pre-paid market.
Dell’Oro says the NFV portion of the VoLTE market continued to increase with an 11% Q/Q growth rate, accounting for over 15% of VoLTE revenue in Q2 2018.
The top vendors in rank order were Nokia, Mavenir, Ericsson, and Huawei. The market is small, and large orders from service providers can widely swing market shares from quarter-to-quarter. Mavenir, in this case won part of the NFV VoLTE contract for Sprint which Sprint is beginning to bring on line.
The bright spot for the VoLTE market in Q2 was the North America region with a positive growth rate over 20% Q/Q. The top four service providers are modernizing their VoLTE networks as part of their digital transformation, and Sprint is bringing theirs online.
Asia Pacific is still the largest region in the world for VoLTE license shipments driven by India and China, but saw a Q/Q decline.