Mobile network infrastructure vendors recorded a 1% year-over-year drop in revenues during the second quarter of 2020, according to MTN Consulting. It marks the third consecutive down quarter for mobile infrastructure vendors, despite the widespread and global push to deploy 5G network riding on new radios.

More noteworthy, perhaps, is the extent to which the continued strength of Chinese vendors propped up the market at large. Excluding Huawei and ZTE from the rest of the market, for example, would yield a 6.3% drop, according to the analyst firm’s calculations.

“The Chinese government’s decision to step on the 5G accelerator lifted global averages, and it also lifted Huawei’s fortunes,” Matt Walker, chief analyst and CEO at MTN Consulting, wrote in the report.

A diminished rate of quarterly revenue declines in Q2 can be directly attributed to a surge in 5G base station spending in China, which boosted revenues for Huawei and ZTE by 16% and 11%, respectively, according to the research firm. Revenues, which were down 5% in the fourth quarter of 2019 and first quarter of 2020, improved to a 1% decline in Q2. 

The continued decline in infrastructure spending is consistent with telecommunications spending overall, and expected considering the economic pressures tied to the ongoing COVID-19 crisis, Walker explained. However, the pandemic can’t be blamed for several years of flat revenues, which have hovered between $210 billion and $220 billion on an annualized basis, according to MTN Consulting. 

“Telco spending — both capex and network opex — has followed a similar pattern of limited volatility,” Walker wrote, adding that infrastructure spending is typically spread across multiple years when networks upgrade from one generation of technology to the next. 

Total mobile network infrastructure revenues hit $53.6 billion during Q2, according to MTN Consulting. 

Vendors that reported notable gains in mobile infrastructure revenue during the quarter include Ciena, IBM, Intel, Huawei, and Hengtong. Vendors that experienced erosion during Q2, according to the firm, include China Comservice, Commscope, Corning, Fiberhome, Nokia, and Samsung.

Outside of the top 20 vendors globally, other “winners” during the quarter include CTC Itochu, Dell Technologies, Fujitsu, Infinera, and VMware. 

“Considering the steep [gross domestic product] drops experienced by many countries in the first half of 2020, the telco market hasn’t performed that badly. In the U.S., for example, MTN Consulting estimates that telco revenues and capex fell by 2% and 9% year over year in Q2, relatively good results considering real GDP in the U.S. fell at an annual rate of 31.7% in the same period,” Walker wrote.

He added that COVID-19 is not the only major trend impacting vendor’s results of late. “The big three cloud providers — Amazon Web Services, Microsoft Azure, and Google Cloud Platform — continue to ramp up their efforts to sell into the telco market,” Walker wrote.

Operators are increasingly eager to work with cloud providers for a mix of workload shifts and the joint development of services, he explained. 

“In some cases, what these webscale players offer to telcos is competitive with the offerings of more traditional vendors in telco network infrastructure, but more often it replaces work which would otherwise be done internally,” Walker wrote. 

The road ahead for network infrastructure vendors will be even more challenging, he warned. “The second half of 2020 is increasingly looking like it may be worse than the first.”