Microwave equipment markets scuttled as LTE backhaul upgrades slow down

The global microwave equipment market saw overall revenues for the fourth quarter drop 7 percent year-over-year, amounting to what IHS called "unseasonably weak" performance.

Richard Webb, research director for mobile backhaul and small cells at IHS, attributed the slowdown to mobile operators being more conservative with spending and to providers in developed markets having completed most of their backhaul upgrades for LTE and not being ready to begin another round of upgrades for LTE-Advanced, LTE-Pro or 5G.

"This is uncharacteristic, as Q4 is typically the strongest quarter of the year for microwave gear. Over the long term, the outlook is brighter, with demand for higher backhaul capacity for 5G driving renewed growth, augmented by the slow-burning adoption in small cell backhaul segment," said Richard Webb, research director for mobile backhaul and small cells at IHS, in a statement.

For 2015, IHS said backhaul accounted for the majority of the microwave equipment market and saw Ethernet-only microwave taking up 38 percent of sales. But the Ethernet growth came at the expense of hybrid equipment, which saw a decline in volume sales during 2015.

Huawei had its largest ever fourth quarter for microwave equipment revenue and now leads the market, ahead of NEC and Ericsson (NASDAQ: ERIC).

The microwave equipment market could see an uptick in business soon if Sprint (NYSE: S) goes forward with its reported network overhaul. As part of the rumored transition, Sprint will reportedly move away from leasing fiber from AT&T (NYSE: T) and Verizon (NYSE: VZ) for backhaul and embrace microwave backhaul for its macro sites and small cells.

For more:
- see this IHS press release

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