Telecommunications Network Operators - 4Q23 Market Review: European Telcos and China Mobile Steer Revenue Uptick, as Capex Downtrend Persists, Industry Headcount Drops to 4.5 Million

This report reviews the growth and development of the telecommunications network operator (TNO, or telco) market. The report tracks a wide range of financial stats for 139 telcos across the globe, from 1Q11 through 4Q23. For the full-year 2023, telcos represented $1.77 trillion (T) in revenues (-0.7% YoY), $263.1 billion (B) in labor costs (3.0% YoY), and $315.1B in capex (-3.6% YoY). They employed approximately 4.50 million people as of December 2023, down 1.5% from the prior year.

VISUALS

Below are the key highlights of the report:

• Revenues: Telco topline posted a modest growth of 1.7% on a YoY basis to post $445.3 billion (B) in the latest single quarter ending 4Q23. Revenues for the full-year 2023 were $1,775.8B, down 0.7% YoY over the previous year. In the latest quarter, YoY growth in equipment revenues surpassed service revenues, mainly due to the strong year-end device sales by major telcos such as China Mobile, AT&T, and Deutsche Telekom. At the operator level, five of the top 20 best performing telcos by topline growth for the full-year 2023 include America Movil (7.7%), STC (Saudi Telecom) (7.3%), Airtel (5.0%), Telefonica (4.5%), and Orange (4.3%). By the same criteria, the worst telco growth came from AT&T (5.2%), KDDI (-4.6%), SoftBank (-3.5%), NTT (-3.3%), and Verizon (-2.1%) during the same period.
• Capex: Capex spending declined by 4.1% on a YoY basis to post $85.9B in the latest single quarter ending 4Q23. Capex for the full-year 2023 was $315.1B, down 3.6% YoY over the previous year. At the operator level, five of the top 20 best performing telcos by capex growth for the full-year 2023 include Airtel (34.3%), Comcast (25.5%), Charter Communications (18.5%), KDDI (13.1%), and Telefonica (9.9%). By the same criteria, the worst capex growth came from SoftBank (-20.5%), Verizon (-18.7%), Deutsche Telekom (-18.7%), BT (-15.3%), and Reliance Jio (-10.8%) during the same period. Capital intensity is off the peak: it was 17.7% in 2023, from 18.3% the year prior.
• Opex and labor costs: Total opex for the telecom industry in the year 2023 stood at $1,504.8B, a decrease of 1.5% over 2022. Excluding depreciation and amortization (D&A) costs, total opex declined by 1.1% on YoY basis to record $1,169.5B in the year 2023. One significant element of telco opex is labor costs, which include salaries, wages, bonuses, benefits, and retirement/severance costs. Labor costs grew by 3.0% YoY in 2023, pushing labor costs as a percentage of opex (excluding D&A) up from 21.6% in 2022 to 22.5% in 2023.
• Profitability margins: Both EBITDA and EBIT margins witnessed a slight improvement in the year 2023 when compared to 2022 - EBIT margin grew from 14.6% in 2022 to 15.3% in 2023, while EBITDA (operating) margin ended 2023 at 34.1%, as compared to 33.9% in the previous year.
• Regional trends: The Americas region managed to sustain its dominance in 4Q23, with 38.0% global share of the total telco market revenues. On a capex basis though, the Asia region finally surpassed the Americas region with a 39.6% of the global share in the latest quarter. Europe maintained its lead in the latest quarter as the region with the highest annualized capital intensity, reaching 18.7% in 4Q23.

Operator coverage:

Regional coverage: