- 2026 capex is set to dip, squeezing some vendors
- AI-RAN is growing fast, but shifts spending mix instead of expanding total capex
- Bright spots include optical transport and high-end routers as data center traffic boosts metro/core demand
Telecom operators the world over are expected to tighten their purse strings in 2026, with Dell’Oro Group forecasting a 2% decline in telecom CapEx.
“It will be a challenging year for telecom suppliers, especially for those with a wireless-focused tilt,” Stefan Pongratz, Dell’Oro Group VP, told Fierce.
And no, AI-RAN won’t be riding to the rescue. Why? Because it’s replacing rather than adding to other network spending.
“AI-RAN is already happening, and investments are growing rapidly. It is not growing the revenue or capex pie, but it is changing the mix,” Pongratz said.
But that doesn’t mean there are no bright spots. Dell’Oro VP Jimmy Yu noted that both the optical transport and high-end router markets are expected to grow in 2026, with cloud providers and some enterprises driving the highest growth percentages.
“While telecom service providers will likely reduce spending on 5G networks, we anticipate they will increase spending on metro and core networks as data center traffic increases, driving higher demand for optical transport and high-end routers,” Yu said.
What’s behind the trend?
Variations in telecom spending are normal, especially as those in the wireless realm work through deployments of new generations of radio technology. But capital intensity mid-cycle with 5G now is expected to drop significantly more than it did mid-way through 4G rollouts.
“What is different this time is that mobile data traffic is not growing as quickly as in the 4G era, and 5G is also providing a greater capacity boost. As a result, operators who are not investing heavily in opportunities beyond the known use cases are well-positioned to scale back capex,” Pongratz explained.
Verizon, for instance, is slashing its capex from $17 billion in 2025 to between $16 billion and 16.5 billion this year. Telefonica, meanwhile, has been working to reduce its capex intensity (capex as a percentage of revenue) for at least two years and its expected to fall to 12% in 2026 from 12.4% in 2025. The operator has said it is aiming for 11% capital intensity by 2030.
Financial credit ratings company Fitch Ratings predicted European telecom capital intensity to drop around 1.5 percentage points in 2026.
And in terms of where things are headed, Pongratz said overall capital intensity is expected to land at around 14% by 2029, with wireless capital intensity specifically forecast to drop 7 percentage points to 11%. The wireless figure compares to a 3-percentage point drop seen between the peak of 4G deployments and mid-cycle capex intensity.
The AI influence
AI is having an impact – though not the way you might think.
Ericsson’s June 2025 Mobility Report noted “GenAI traffic represents only 0.06 percent of the total network data traffic.” As Pongratz noted in a recent blog, this has led to a split among operators, with some believing that traffic growth will soon level out while others think the industry is just at the beginning of a game-changing cycle.
“These two very different visions are important, as they will shape how operators approach capex, architectural shifts, the timing of 6G and the need for AI RAN, among other things,” he wrote.