The ugly underbelly of falling telco opex

While telco opex dropped in 2023, the biggest contributor were divestments, which isn't ideal because service providers are selling business segments, explains Omdia's Adam Mackenzie.

Kelsey Ziser, Phil Harvey

September 19, 2024

At a Glance

  • How AI is impacting telco headcount (03:34)
  • How service providers are using AI investments to appear more energy and cost efficient (16:27)
  • Impact of 5G and fiber deployments on telco opex (21:36)

On the bright side, adjusted global telecom opex fell by 1% to $1.29 trillion in 2023, while revenue grew 1% to $2 billion, according to analyst group Omdia. But lurking beneath the rosy appearance of lower operating costs are some hard truths. 

While telco opex dropped in 2023, divestments were the biggest contributor, which isn't ideal because service providers are selling business segments, Adam Mackenzie, senior analyst of Service Provider Network Evolution for Omdia, tells Light Reading. Omdia and Light Reading are owned by the same parent company, Informa.

Surprisingly, despite layoffs in the industry, Omdia found that telco labor opex has gone up as companies are likely spending more on salaries and pensions. Energy prices are also taking a toll on telco opex, according to Omdia's report.

"Network utilities increased by 8% in 2023, which AI likely contributed to," reports Omdia. "Some of the increase was related to energy price rises in previous years impacting telcos with hedged energy contracts, so some of the effect was lagged."

In this podcast, Mackenzie provides insight into Omdia's findings on factors contributing to the state of global telco opex in 2023. He also explains how factors such as AI, 5G and fiber deployments are playing an important role in shaping telco opex. 

Click on the caption button for a lightly edited transcript. 

Here are a few topics we cover:

  • Highlights from Omdia's global telco opex report – opex is down due to divestments and layoffs (00:46)

  • How AI is impacting telco headcount (03:34)

  • How can telcos compete with webscalers in building their workforce? (05:59)

  • Is AI making a significant impact on reducing labor costs for service providers? (07:53)

  • How service providers are using AI investments to appear more energy and cost efficient (16:27)

  • Impact of 5G and fiber deployments on telco opex (21:36)

About the Authors

Kelsey Ziser

Senior Editor, Light Reading

Kelsey is a senior editor at Light Reading, co-host of the Light Reading podcast, and host of the "What's the story?" podcast.

Her interest in the telecom world started with a PR position at Connect2 Communications, which led to a communications role at the FREEDM Systems Center, a smart grid research lab at N.C. State University. There, she orchestrated their webinar program across college campuses and covered research projects such as the center's smart solid-state transformer.

Kelsey enjoys reading four (or 12) books at once, watching movies about space travel, crafting and (hoarding) houseplants.

Kelsey is based in Raleigh, N.C.

Phil Harvey

Editor-in-Chief, Light Reading

Phil Harvey has been a Light Reading writer and editor for more than 18 years combined. He began his second tour as the site's chief editor in April 2020.

His interest in speed and scale means he often covers optical networking and the foundational technologies powering the modern Internet.

Harvey covered networking, Internet infrastructure and dot-com mania in the late 90s for Silicon Valley magazines like UPSIDE and Red Herring before joining Light Reading (for the first time) in late 2000.

After moving to the Republic of Texas, Harvey spent eight years as a contributing tech writer for D CEO magazine, producing columns about tech advances in everything from supercomputing to cellphone recycling.

Harvey is an avid photographer and camera collector – if you accept that compulsive shopping and "collecting" are the same.

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