LTE Equipment Market Could Decline at a CAGR of -13% by 2020

According to a study by IHS published back in Q1 2016, LTE has peaked and 2016 will be its first year of decline. This is because China has reached the end of its massive LTE rollouts, LTE rollouts in Western and Central Europe are very close to completion, and also the Middle East 3G upgrades are complete.

In 2015, the worldwide macrocell infrastructure market totalled $48 billion and quarterly LTE revenue was $2 billion higher than 2G and 3G revenue combined.

IHS forecasts that the LTE equipment market will decline at a CAGR of -13% until 2020, going down from the $48 billion in 2015 to around $28 billion in 2019.

However, IHS expects the market for the software that runs on carrier hardware to continue to expand, driven by LTE-Advanced upgrades. The market will grow from $15.2 billion in 2015 to $23 billion by 2020.

As of January 2016, 480 commercial LTE and 116 LTE-Advanced networks had been launched. GSA (Global Mobile Suppliers Association) forecasts that by the end of the year, the figure will be 550. Furthermore, around 25% of 4G operators have launched LTE-Advanced systems. Some of the most mature 4G markets by the end of 2016 will be South Korea where the 4G market share is 90%, Japan, where the share is 82% and North America, where it is 79%. As an example, in Japan, the mobile infrastructure market fell 19% year-over-year in 2014. In the first half of 2016, the year-over-year decline was 16%.

5G is expected to fuel the next round of growth for the mobile network infrastructure market, but that growth is not expected to take place until after 2020. Thus, a CAGR of -13% for LTE equipment until 2020 would mean rough times for network equipment vendors.

Strategy Analytics predicts that by 2020, there will be 2 million 5G subscriptions. By 2022, there will be 116 million. As a comparison, Strategy Analytics forecasts there to be 5.6 billion 4G subscriptions by 2022.

When it comes to telecom infrastructure services, TBR is forecasting that also that market will continue to decline between 2015 and 2020 as operators accelerate legacy decommissioning and realize cost savings from the use of SDN and NFV, driving down the product-attached services (i.e., deployment and maintenance) market.

SNS Research has a bit more positive forecast, estimating that the global 2G, 3G, and 4G infrastructure market will decline at a CAGR of 1% by the end of 2020. Despite of the decline in the wider market, operators are expected to increase their spending in areas such as small cells, carrier Wi-Fi, Distributed Antenna Systems (DAS) and Centralized-RAN (C-RAN). Small cell and carrier Wi-Fi is expected to represent a market of $3 billion in 2016.

Yet another forecast comes from Custom Market Insights, which expects the 2G, 3G and 4G wireless network infrastructure market to decline at a CAGR of 2% by 2020.