The first quarter was a decidedly mixed bag in the telecoms sector due to the onset of COVID-19 and Huawei's ongoing issues, according to MTN Consulting.
Matt Walker, chief analyst for MTN Consulting, tallied up the winners and losers for vendor sales of network infrastructure (NI) products and services in the first quarter for the telco sector.
Overall, Telco NI sector amounted to $49.5 billion in vendor revenues in Q1, which was down 4.3% from the same quarter a year ago. MTN Consulting said the decline was similar to the 4.7% decrease that was recorded in the preceding fourth quarter.
On a trailing 12 month, or annualized, basis, Telco NI revenues totaled $213.5 billion through Q1, down 3% from the preceding Q1 over the same 12-month span. The decline was largely due to the last two quarters’ of negative growth. Telco NI revenues were essentially flat on a year-over-year basis in both the second and third quarters of last year.
Vendors started to feel the pinch of the coronavirus pandemic in Q1, which included supply chain issues, especially in China where a large number of fiber companies are located.
The switch to work-from-home scenarios benefited many vendors, according to MTN Consulting, as well telecommunications being classified as "essential services."
On the flip side, telcos slowed or re-evaluated their spending priorities in the first quarter as manufacturing slowed down and supply chain constraints cropped up.
"The second quarter of 2020 will likely be substantially worse, based upon economic trends and public statements from Nokia, Ericsson, Samsung, and others," according to the report.
Winners and losers
MTN Consulting found that companies that are classified as cable and connectivity vendors (CCV) accounted for the worst performances in Q1. Those vendors suffered from both constraints in manufacturing capacity—due in part to the concentration of fiber production facilities in China—and the labor-intensive nature of fiber installation. CCV revenues in Q1 dropped nearly 21% on a year-over-year basis with Wuhan-based Fiberhome hit the hardest.
By contrast, vendors in the "network segment provider" (NSP) sector posted a 7% year-over-year increase in revenue in Q1.
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"This modest surge is due to both the nature of NSP sales, which can largely be done remotely without a need for social distancing, and the ongoing telco shift towards software-centric networks," according to MTN Consulting. "In our estimation, NSPs recording double digit year-over-year growth in Telco NI revenues in 1Q20 include Affirmed Networks, Dell Technologies (including VMWare), Mavenir, Radcom, Radisys, which now part of Jio Platforms, and SeaChange."
The strongest individual results in Q1 revenue growth terms, came from A10 Networks (Telco NI revenues up an estimated 21% year-over-year), Dell Technologies (plus 40%), Intel (plus 33%), and NEC (plus 31%.)
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Among the top 25 overall vendors, the weakest results in Q1 Telco NI came from Corning (down 27% year-over), Fiberhome (-42%), Hengtong (-11%), HPE (-20%), Samsung (-23%). The first three of these are in the CCV segment. HPE is struggling through yet another reorganization while Samsung saw its early 5G revenues in Korea start to taper off.
Huawei is still far and away the largest vendor in the Telco NI market, but its revenues fell by an estimated 6.7% year-over-year in the first quarter, although MTN Consulting noted Huawei's results were had to evaluate.
Even with the decline, Huawei's share of Q1 global revenues was still almost 20% more than the next seven vendors: Ericsson (10.1% share in Q1), Nokia (9.1%), China Comservice (5.3%), Cisco (4.71%), ZTE (4.66%), NEC (3.9%), and CommScope (3.3%.)
Huawei has said it is in "survival mode" this year due to restrictions put in place by the Trump administration.