Capital expenditure among mobile network operators is one of the most closely watched metrics in the wireless business. Capex is a key indicator of the health and direction of the wireless business. Based on MNO guidance for 2025, we estimate that U.S. wireless-only capex will come in at $33 billion, up over two percent from $32.3 billion in 2024. That 2025 figure represents a turnaround. The 2024 figure was down 26 percent from 2023.
Generally, capex falls into two main categories: strategic and sustaining. Strategic capex accounts for roughly 80 percent of the total and is applied to new cell site construction and network core expansion. Sustaining capex accounts for the balance and applies to replacements or upgrades at cell sites, in the core and other wireless infrastructure elements.
Note that sustaining capex is not an operating expense since all associated material and labor are capitalized. The proportions may vary from year-to-year and MNO-to-MNO but they generally are in that 80/20 ballpark.
Of the total, it is important to understand how that capex is allocated. These proportions will vary depending on where the MNOs are in their respective network build and upgrade cycles.
The radio access network typically absorbs the largest share, around 45-50 percent of the total budget. RAN equipment itself accounts for 75-80 percent of that total comprising remote radio units (RRUs), baseband units (BBUs), passive and active antennas, coaxial, fiber and power cables that connect RRUs and BBUs, passive RF connectors (combiners, splitters, couplers), and steel hardware for mounting equipment on towers, rooftops, or other structures.
With OpenRAN, RAN elements break down into radios units (RUs) and BBUs are split into distributing units (DUs) and centralized units (CUs). Fronthaul fiber connects DUs to RUs, mid-haul fiber connects DUs and CUs, while backhaul fiber connects CUs to the Core. AI is expected to feature significantly in the RAN by supporting dynamic bandwidth allocations and energy efficient operation along with edge workloads but may not become significant until 6G is deployed in the 2030 timeframe.
With the virtualization of core functions in the cloud in data centers, proportional spending in the Core has gone down from the days of circuit-switching and data switches and routers. Core capex is around 12-15 percent of the total.
Site services include network planning, site acquisition, permitting and licensing, site engineering and installation and account for 20-25 percent of the total capex. Tower contractors and tower companies often provide these services that tend to increase during network expansion periods. Tower companies confirm greater MNO demand for colocations over the next 18-24 months; their reported professional services revenue growth reflects that demand.
Back-office billing systems and operational support systems account for another 8-10 percent. Again, AI is expected to impact BSS and OSS functions through more automated customer services along with predictive network management and maintenance.
Site infrastructure such as equipment shelters or cabinets along with back-up generators and site security accounts for 3-4 percent of the total.
DC power systems and batteries take a similar 3-4 percent proportion of the budget. Remote battery monitoring and predictive maintenance versus scheduled preventative maintenance is becoming more prevalent with AI.
Backhaul facilities mainly comprise dark or lit fiber leased from a tower company or fiber network operator. In remote locations where fiber is not available, MNOs may deploy capex for their own point-to-point microwave radio systems. Backhaul capex accounts for less than 3 percent of the total.
Such a capex allocation breakout serves as a useful guide to business planners and marketers among equipment vendors and contractors. These capex breakouts can represent the total addressable market for these respective products and services.
By John Celentano, Inside Towers Business Editor
