5G and LTE Infrastructure Spending Forecasts until 2026

Wednesday, June 14, 2017

5G and LTE Infrastructure Spending Forecasts until 2026

In an earlier blog post [1] on the Edge of the Cloud blog, we listed numerous LTE and 5G-related forecasts and historical data over a 30-year period between 2009 and 2039. In this blog post, we will take a closer look at forecasts for global spending on LTE and 5G infrastructure. Similar to our earlier blog post about 5G subscription forecasts [2], the approach we follow is to take an average over forecasts from different sources for each year. The source data is available in our earlier blog post.

Global Spending on LTE Network Infrastructure

Figure 1 shows the average forecast (or historical data the in case of years 2009-2016) for global LTE network infrastructure spending from 2009 to 2021. The error bars in the figure represent 95% confidence intervals (a 95% confidence interval provides a range of values which is likely to contain the population parameter of interest, that is, the global spending on LTE infrastructure in our case, at a 95% confidence level [3]). In some cases, we were able to find only a single forecast or historical value. In such cases, no error bars are shown.

From the figure, we can see that global annual spending on LTE network infrastructure peaked in 2015 at $25,9 billion, and is expected to decline with a CAGR of -12% until 2021.

Figure 1 - Global LTE network infrastructure spending 2009-2021

Global Spending on 5G Network Infrastructure

The average annual forecasts for global spending on 5G network infrastructure are shown in Figure 2. In the figure, the numbers shown for 2017-2019 represent annual spending on pre-commercial 5G networks. From the figure, we can see that 5G infrastructure spending is expected to grow from 2017 until at least 2026 with a CAGR of 39%. However, the estimates from different sources vary greatly as indicated by the very high error bars in the figure. Due to the large error bars, we cannot for instance conclude whether the differences between years 2023-2025 are statistically significant. We can also observe that the peak annual spending on 5G network infrastructure (in year 2026) is over 60% higher than the peak annual spending on LTE infrastructure (which occurred in 2015).

Figure 2 - Global 5G network infrastructure spending 2019-2026

Global Spending on LTE and 5G Network Infrastructure Compared

Figure 3 plots the spending on both LTE and 5G network infrastructure during each year after (pre-commercial) launch. For LTE, Year-1 is 2009. For 5G, it is 2019. If looking only at the average values (i.e., not considering the error bars), the future looks very bright for 5G – spending on 5G infrastructure will be higher than for LTE for each year from Year -1 to Year 7. In addition, whereas LTE started to decline after Year 6, 5G seems to keep on growing. However, if looking at the error bars, we cannot conclude whether spending on 5G infrastructure will be higher or lower than spending on LTE infrastructure for any year in a statistically significant sense.

Figure 3 - Global LTE and 5G network infrastructure spending for each year following launch

Global Mobile Infrastructure Spending

Figure 4 depicts the total spending on mobile infrastructure (2G, 3G, 4G and 5G) until 2020. Despite of the rapidly declining LTE market, on the average, analysts seem to believe that the global mobile infrastructure market will stay relatively flat until 2020. There is a clear dip in the average values in 2019, but the differences to 2018 and 2020 are not statistically significant. The flat spending forecasts, especially when considered together with Figures 1-3, seem to imply that the growth in pre-commercial and commercial 5G network infrastructure spending might be able to effectively compensate for the declining LTE infrastructure market.

Figure 4 - Global mobile infrastructure spending 2008-2020 (including 2G, 3G, 4G and 5G)

Conclusions

Some conclusions that we can draw from the analysis above include:

Global spending on LTE infrastructure is declining at a fast pace (as is well known in the industry).
Forecasts for 5G infrastructure spending are very unreliable for 2017-2020. Despite of the high variance in the forecasts, between 2021 and 2025 the 5G infrastructure spending will grow and is likely to reach at least over $20 billion in 2025 (which sounds promising since global LTE infrastructure spending peaked at $25,9 billion in 2015).
It appears that, on the average, analysts believe that the growth in pre-commercial and commercial 5G infrastructure spending is able to effectively compensate for the declining LTE market from 2017 onwards.
On the average, analysts believe that peak spending on 5G network infrastructure could be over 60% higher than peak spending for LTE network infrastructure.
However, as concluded also in our earlier blog post on 5G subscription forecasts, due to the high variance among the forecasts from different sources, we should probably take the values from any source with a grain of salt.