Providing space for equipment is the fundamentals of the towerco business model, and last year saw a significant decline in equipment orders. According to the consultancy Dell'Oro equipment revenues declined by 11% in 2024; the worst performance since 2002, when kit revenues dropped by over 20%. Following a weak 2023 this means that equipment revenues declined by 14%, the analyst firm noted.
In a piece published by Dell'Oro analyst Stefan Pongratz he says "This remarkable output deceleration was broad-based across the telecom segments and driven by multiple factors, including excess inventory, challenging macro environment, and difficult 5G comparisons."
Of the six sectors tracked by Dell'Oro (broadband access equipment; microwave and optical transport; mobile core networks; RAN; and SP routers and switches) it was double-digit contractions in optical transport, routers and switches and RAN, which drove the decline. The estimated 14% decline in RAN revenues is especially relevant for towercos as it is RAN equipment hosted on towers.
Through 2024 the slowdown was felt across the five regions — North America, EMEA, Asia Pacific, China, and CALA — the deceleration was more pronounced in the broader Asia Pacific region, reflecting challenging conditions in China and Asia Pacific outside of China.
4Q24 saw demand stabilise driven by growth in North America and EMEA, which nearly offset constrained demand in Asia Pacific and China.
Summarising the year ahead for the equipment vendor world Pongratz says: "Market conditions are expected to stabilize in 2025 on an aggregated basis, though it will still be a challenging year. The analyst team is collectively forecasting global telecom equipment revenues across the six programs to stay flat."
In part thanks to the recovery in North America and the stabilisation predicted worldwide, things look up for towercos in 2025. MoffettNathanson report that leading towercos like SBA Communications, American Tower and Crown Castle have ourperformed the market year to date, suggesting a strengthening of towerco's position with investors.
