Cloud Provider Spend On IT Capex Climbs As Telecom Falls

‘Telcos remain locked in a low-to-no-growth world and their Capex reflects that,’ says Synergy Research Group’s John Dinsdale.


Hyperscale cloud companies are spending more and more money on Capex IT infrastructure compared with the largest telecommunication companies as overall IT infrastructure spending in 2022 reached $700 billion.

In 2022, hyperscale operators spent roughly $200 billion on Capex IT infrastructure such as network switches and data center hardware and software, representing a 9 percent increase annually and led by Amazon, Google and Microsoft, according to new data from IT market research firm Synergy Research Group.

Comparatively, telecom spending on IT infrastructure by companies like Verizon, AT&T and China Mobile dropped 4 percent in 2022 to approximately $290 billion, Synergy Research Group reported.

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“Hyperscale operator share of total spending has continued to rise steadily over the last few years,” said John Dinsdale, chief analyst at Synergy Research, in an email to CRN. “Meanwhile, telcos remain locked in a low-to-no-growth world and their Capex reflects that. For hyperscale operators, the boom in cloud services and continued growth in other digital services is driving ongoing growth in spending.”

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Hyperscaler Share Climbs 13 Percent To 29 Percent

In 2022, hyperscale operators accounted for 29 percent share of the total Capex infrastructure spending market, up significantly from 13 percent share in 2016.

Some of the biggest spenders in 2022 were Amazon, Apple, Google, Microsoft and Alibaba.

Meanwhile, telecom companies’ share of Capex IT infrastructure spending was 42 percent in 2022, down from 58 percent share in 2016.

The largest telco spenders on technology infrastructure last year were China Mobile, Deutsche Telekom, Verizon, AT&T, NTT and China Telecom.

2022 Capex Analysis – Growth in Hyperscale and Enterprise Spending; Telco Remains in the Doldrums

— Synergy (@SRG_Research) January 26, 2023

Overall spending by these both fixed and mobile telco operators has been relatively flat over the past eight years, with annual spending levels for infrastructure hovering around $290 billion each year.

Synergy market data covers total capital expenditure for telco and hyperscale operators mostly around networking and data center hardware and software.

Enterprise Spending Grows 9 Percent

The final market segment covered in Synergy’s new data is enterprise spending on IT infrastructure, which grew 9 percent year over year in 2022 to roughly $210 billion.

The enterprise spend accounted for 29 percent of the total Capex infrastructure market in 2022.

“Enterprise spending has also bounced back a bit in the last two years after a soft spell in 2019 and 2020,” said Dinsdale.

Since 2016, enterprise IT spending has grown by an average of over 6 percent annually.

Synergy said to make the market data numbers more comparable, enterprise spending covers data center hardware and software, networking and collaboration tools. It excludes enterprise spending on communication and IT services, devices and business software.

“There has also been something of a post-pandemic bounceback for both enterprise data centers and switches, the former being helped by higher costs due to supply chain issues that are being passed on in the form of higher ASPs [average selling price],” said Dinsdale.

“For equipment and software vendors, the good news is that overall IT infrastructure spending will continue to grow steadily over the next five years,” he said.