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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.
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)
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