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Post updated: Nov. 15, 2025

A rebound in financial services and activities around improving productivity and optimizing costs drove revenue performance for IT services vendors during 2Q25

Outlook: TBR estimates trailing 12-month (TTM) revenue growth for the benchmarked IT services vendors will be 2.6% year-to-year in 2025, higher than 2024 revenue growth of 0.9% year-to-year. The market dynamics have not changed since 3Q23, when the uncertain macroeconomic environment began to pressure discretionary spending and consulting activities while fueling a wave of outsourcing demand around infrastructure and application modernization, productivity improvement and cost optimization. Clients are showing increased interest in large transformational offerings to increase productivity and reduce costs, and this trend is increasing the share of managed services deals in IT services providers’ signings mix. Manufacturing faces ongoing downward pressure in Europe, particularly in the automotive sector, but demand for supply chain optimization and digital transformation continues to fuel growth in the sector globally. Vendors are experiencing a rebound in demand from clients in the financial services sector such as banks seeking to improve customer experience (CX) through the use of agentic AI solutions. Although agency spending and headcount cuts by the Department of Government Efficiency (DOGE) negatively impacted the performance of some IT services providers in the U.S. public sector in 1H25, we expect new consulting opportunities to emerge in the long term around efficiency improvement, including systems enhancement, technology modernization and AI adoption. However, some vendors are warning that solicitations, award activity and adjudications have been slowing and that there will be some challenges in 2H25, and expect that consulting engagements will face increased scrutiny.

Key Vendors: Accenture remained the largest vendor in TBR’s IT Services Vendor Benchmark in terms of revenue and headcount and was No. 7 in TTM revenue growth in 2Q25. Accenture’s relentless execution will help the company maintain stakeholder trust as it enters the next phase of its business model rotation and pursues opportunities with upper-midmarket clients. NTT DATA was No. 2 in TTM revenue and No. 14 in TTM revenue growth in 2Q25. NTT’s recent purchase of the remaining shares of NTT DATA creates uncertainty around NTT DATA’s decentralized structure, which currently includes both domestic and overseas operations and enables NTT DATA to tailor service offerings to specific regional markets. Tata Consultancy Services (TCS), which was No. 3 in TTM revenue and No. 16 in TTM revenue growth in 2Q25, demonstrates a strong commitment to innovation through significant investment in research and development, which has incrementally created valuable intellectual property that supports the company’s cutting-edge platforms and solutions.

Market Overview: TTM IT services revenue grew 2.5% year-to-year in 2Q25, compared to year-to-year increases of 1.6% in 1Q25 and 0.9% in 2Q24. Accelerated momentum in financial services and activities around IT modernization and efficiency improvement enabled vendors to alleviate pressures from tight discretionary spending and extended buyer decision cycles. Vendors were able to stabilize profitability in 2Q25, with 20 of the 31 benchmarked vendors improving TTM operating margins year-to-year due to tight expense management, productivity initiatives and stable utilization, and increased use of automation, generative AI (GenAI) and agentic AI solutions.

Solutions enabled by technology partner capabilities increase IT services providers’ value proposition around addressing specific infrastructure, operational and business challenges

Quarterly focus: Alliances

TBR Assessment: According to TBR’s 2Q25 Cloud Ecosystem Report, “Enterprise buyers are becoming increasingly conflicted in their expectations of how vendors can best support their technology needs. … In a nutshell, vendors cannot rely on a one-size-fits-all AI ecosystem strategy across regions. Success will require region-specific approaches: IP-led initiatives in APAC, orchestration frameworks in Europe, and startup-centric marketplaces in the Americas. All must be underpinned by interoperable APIs and strong governance to help IT services providers capture and monetize local demand. Executing against such expectations while continuing to rely on a traditional labor-arbitrage model will test professional services firms’ readiness to transform their own operations while maintaining trust with hyperscalers, which continue to explore the opportunity to drive professional services revenue by simplifying the sales process and marketplace through the use of agentic AI.”

Examples of recent vendor activities
IBM is expanding activities with technology providers to augment its cloud and AI capabilities and support clients through all stages of transformation and optimization. Since April IBM has expanded its relationships with Microsoft, Amazon Web Services (AWS), Oracle, Salesforce and SAP. IBM Consulting established a Microsoft practice with 33,000 certified experts dedicated to technologies such as Azure OpenAI, Azure Cloud, Copilot, Fabric and Sentinel. IBM, which has approximately 12,000 AWS-trained professionals, introduced tools and frameworks for building and managing AI agents and integrating them with technologies available on the AWS Marketplace. IBM Consulting is providing AI Integration Services to help clients establish agentic AI capabilities and is offering the IBM Consulting Advantage solution to transform processes through agentic AI on AWS. IBM and Oracle provide agentic AI and hybrid cloud solutions by bringing IBM watsonx to Oracle Cloud Infrastructure. IBM, which has more than 10,000 dedicated Oracle consultants, is expanding its consulting services to enable the use of AI agents across platforms and transform business processes. IBM has more than 7,000 Salesforce-certified professionals and is developing its Salesforce capabilities by introducing AI agents based on IBM watsonx Orchestrate that work with Salesforce technologies and IBM Granite models. IBM has more than 18,000 SAP-certified consultants and, together with SAP, launched a hyperscaler option for moving SAP S/4HANA workloads from on-premises IBM Power servers to the cloud.

Although client trust wavered in the past several quarters due to uncertainty around Atos Group’s transformation, the company received stable support from its technology partners, which will drive portfolio expansion and position the company for growth. In July Atos Group was awarded the Golden Certificate from SAP and was certified for the 10th consecutive time as a SAP Global Operations Partner. The award reflects Atos Group’s dedication to its partnership with SAP, which has spanned more than 20 years, and established managed services capabilities with over 10,000 professionals with SAP expertise. Also in July, Atos Group renewed its status as a Google Cloud Managed Service Provider, driven by capabilities around providing cloud-native services, infrastructure solutions and digital modernization. In April Atos Group received Microsoft’s Private Cloud Solution Partner Designation due to its track record of providing Azure Cloud in data centers globally. Expanding capabilities around Google Cloud and Microsoft diversifies Atos Group’s infrastructure services capabilities and creates opportunities for growth outside of commoditized and low-growth traditional infrastructure services segments. Over the past several years the company has been decreasing its dependency on legacy infrastructure services and reviewing and exiting low-growth and low-margin contracts in the segment.ications strengthens Cognizant’s Neuro AI platform.

Although managed services activities contributed to an acceleration in 2Q25 overall TTM revenue growth year-to-year, 15 of the 31 benchmarked vendors ranked below the average

 

 

Vendor spotlight excerpt

Accenture pursues new revenue growth opportunities with upper-midmarket clients, while TCS leverages its cloud and AI expertise and solutions to pull long-term managed services deals

Key Findings and TBR Assessment

Accenture, NTT DATA and TCS retained their No. 1, No. 2 and No. 3 revenue contribution positions, respectively, compared to 1Q25. Vendors will be challenged to maintain sales growth momentum in 2026 as Accenture navigates macroeconomic headwinds and internal operating model adjustments. Building a pipeline in the midmarket will gradually augment Accenture’s performance. TCS leverages its scale and cost-efficient global talent to offer flexible, competitive pricing, which will be a key advantage as clients scrutinize budgets during uncertain economic times.

IBM moved up from No. 5 to No. 4, Capgemini rose from No. 6 to No. 5, and Fujitsu dropped from No. 4 to No. 9. Although IBM Consulting’s revenue growth has been negatively impacted by clients’ extended decision making, the business continues to benefit from clients’ emphasis on cost-efficient, high-impact technology investments. Pursuing opportunities in the public sector in Europe, specifically in the defense subsegment and around sovereignty solutions, will positively affect Capgemini’s revenue expansion in 2H25.

Cognizant and Infosys each moved up by one position, to No. 6 and No. 7, respectively, compared to 1Q25. Cognizant is capturing opportunities in vendor consolidation, cost reduction and efficiency improvements, and is leveraging its AI expertise and Neuro AI platform to effectively win new projects with existing clients. Infosys is deploying industry-centric, cloud-ready, GenAI-enabled services and solutions within established IT buyer relationships while also relying on customer-zero use cases.

 

Revenue segment views excerpt

C&SI revenue growth year-to-year accelerated from 2Q24 to 2Q25, indicating clients are becoming more open to signing discretionary funded engagements

C&SI: Although discretionary spending remained tight, some of the IT services providers saw pockets of growth in C&SI in 2Q25, leading to an increase in C&SI revenue share and revenue growth year-to-year acceleration compared to 2Q24. Portfolio development, client relationship building and skills development to drive transformational engagements aided revenue performance in 2Q25. For example, Accenture is partnering with Deloitte and Korn Ferry to support Saudi Aramco’s employee experience transformation program using LearnVantage capabilities. Capgemini is working with GN Hearing to improve the company’s customer experience and order processing by implementing a Salesforce global order management system.

BPO: Vendors’ BPO businesses continue to benefit from the ongoing shift in buyer priorities from innovation and growth to business resiliency and optimization. Automation, GenAI and agentic AI capabilities within BPO will shift vendors’ service delivery models and generate productivity improvements; however, GenAI and agentic AI threaten the core value proposition centered on human-backed service delivery. IBM Consulting will combine AI Integration Services with capabilities from its partner ecosystem to enable clients to reengineer business processes, improve the user experience, and orchestrate systems comprising AI assistants, agents and data.

Application outsourcing (AO): Application outsourcing revenue growth accelerated year-to-year to 2Q24. Enterprise applications are core to broader digital transformation engagements and create expansion opportunities for vendors. Preparing clients’ applications and data streams for cloud and AI integration continues to fuel managed application services opportunities.

IT outsourcing (ITO): Integration of new infrastructure, enabled by vendors’ cloud and consulting practices, provides a natural starting point for companies to build their managed services pipeline. Demand for IT optimization and IT operations efficiency through AI and automation, and security services continues to fuel ITO revenue opportunities. For example, in July Atos Group renewed its status as a Google Cloud Managed Service Provider due to its capabilities around delivering cloud-native services, scalable infrastructure solutions and digital modernization to enterprises globally through advanced support, optimization and AI-driven management of Google Cloud environments.

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Expansion accelerated in the federal IT market in 3Q24 as renewed M&A activity by several federal IT vendors augmented strong, stable demand for digitally based IT modernization

Statutory year-to-year revenue growth for the 11 benchmarked vendors in the U.S. federal market on a weighted average basis rose 100 basis points sequentially, increasing from 8.3% in 2Q24 to 9.3% in 3Q24. Acquisitions by AFS (Cognosante), BAH (PAR Government Systems Corporation [PGSC]), CACI (Quadrint in 1Q24 and Azure Summit Technologies [AST] in 3Q24), CGI Federal (Aeyon), General Dynamics Technologies (Iron EagleX) and KBRWyle (LinQuest) generated an inorganic tailwind to overall market growth of roughly 180 basis points in 3Q24.
 
Federal IT executives (e.g., CACI CEO John Mengucci) have indicated that the M&A market became more buyer-friendly during 2024, prompting several benchmarked vendors to leverage acquisitions to address portfolio gaps in multiple areas, including digital transformation (DT) and emerging technologies for classified defense and intelligence operations. Vendors have been acquiring, and will continue to hunt for, smaller peers with scalable cloud and digital modernization capabilities as well as deep existing (and likely cloud-related) relationships with federal agencies.
 
Underpinning inorganic market growth is enduring robust demand for digitally transformative technologies in AI, cloud, analytics and data science, as well as the continued need to upgrade baseline IT infrastructures across the federal sector to accommodate digital modernization.
 

Civil agencies continue to aggressively invest in cybersecurity, health IT and Agile-based software systems, leading to sustained double-digit civil sector IT spending growth

Weighted average growth in the civilian sector accelerated 80 basis points sequentially, rising from 9.6% in 2Q24 to 10.4% in 3Q24. Vendors including BAH and Leidos have posted multiple quarters of double-digit growth in their respective civil units as of 3Q24, with robust rates of growth expected to persist well into 2025. Sector growth was sustained at or near 10% throughout federal fiscal year 2024 (FFY24) as demand among civil agencies remains robust for comprehensive zero-trust and cyber incident support solutions, particularly by the U.S. Department of Homeland Security (DHS), the Department of Health and Human Services (HHS), the IRS and NASA.
 
Attracting and retaining cybersecurity talent also remain top priorities for nearly all civilian agencies, which are tapping vendors like AFS, BAH and Deloitte Federal for human resource advisory services. NASA launched an eight-year, $2 billion program, NASA Consolidated Applications and Platform Services (NCAPS), during 3Q24 to develop and deploy Agile-based software for over 200 IT systems, with vendors including CACI among the primary awardees.
 
Health IT is generating new revenue and profit streams for the benchmarked vendors, and agencies including the HHS (and its subagencies, CMS, the CDC and NIH) are seeking agencywide AI and analytics adoption services. The top five benchmarked vendors in year-to-year civilian sector revenue growth in 3Q24 were AFS (25%), BAH (16.1%), SAIC (10.8%), Maximus (9.3%) and CACI (7.9%).

Federal IT spending remained robust throughout FFY24, and the market appears poised for another strong year in FFY25, even as CY25 begins with yet another continuing resolution

TBR projects weighted average year-to-year federal IT services revenue growth for the 11 benchmarked companies will decelerate to between 8% and 8.5% in 4Q24, down from 9.3% in 3Q24. We anticipate weighted average year-to-year revenue growth in the defense sector will fall to between 6.8% and 7.3% in 4Q24, down from 8.6% in 3Q24, while civilian revenue growth remains between 10% and 10.5% in 4Q24, in line with the 10.4% increase in 3Q24.
 
Four leading federal systems integrators — BAH, CACI, Leidos and SAIC — as well as smaller federal IT peer KBRWyle elevated their respective revenue growth forecasts for their current fiscal year when tendering 3Q24 fiscal results, indicators that the federal IT macro environment will remain mostly growth-friendly through FFY25.
 
The new federal fiscal year began with a continuing resolution (CR) that extended government funding until Dec. 20, when a subsequent CR was enacted to fund federal operations until March 14, 2025. Further CR extensions in FFY25 would cause budget delays that could impede the ability of federal IT contractors to convert backlog into revenue, but most vendors expect revenue growth to remain on a solidly upward growth trajectory in FFY25.
 

 

Pressures on resource management teams at federal IT contractors continue easing as the federal technology labor market returns to pre-pandemic rates of employee attrition and retention

Federal IT vendors are expanding training of their workforces across a variety of emerging technologies, including AI, analytics, cloud, EW, SIGINT and communications. The competition for talent in federal IT continues to cool, according to executives at several vendors, who have indicated that current trends in the labor market in federal technology are reminiscent of those seen in 2020. Recruiting and upskilling initiatives at federal IT vendors emphasize skills in AI/GenAI, machine learning and security technologies.

Spotlight on IT and professional services vendors serving the public sector: Resource management

Leidos CFO Chris Cage noted in the company’s 3Q24 earnings discussion that employee retention levels remain at all-time highs, as the federal IT labor market continues to cool after the hyper-competitive, post-pandemic period. BAH CFO Matt Calderone indicated his firm received over 100,000 applications in one month during 3Q24.
 
Amanda Christian, CACI SVP of Contracts and Subcontracts, is leading an effort to consolidate the company’s finance, accounting, contracts and subcontracts activities to enhance cross-collaboration and improve the company’s already strong win rates on net-new awards and recompetes.
 
Peraton continued to support Dakota State University’s CybHER Security Institute this summer to encourage young girls to pursue careers in cybersecurity. The company has recently ramped up its efforts to develop a cybersecurity talent pipeline. Peraton has promised to double its related apprenticeships, hire over 200 interns, set up an initiative to help people pivot into cybersecurity, and expand its ties with community colleges over the course of 2024.

 

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FWA remains the dominant 5G use case

Communication service providers (CSPs) in many countries (developed and developing) globally will leverage 5G FWA to provide competitive high-speed broadband services. CSPs increasingly view 5G FWA as a viable and, in many cases, more cost-effective alternative to traditional fixed broadband services. In many cases, FWA also provides CSPs with a time-to-market advantage versus traditional, fixed-access operators in greenfield environments such as rural areas. According to the June 2025 Ericsson Mobility Report 141 CSPs globally are currently offering 5G FWA services, up from 128 CSPs offering 5G FWA services a year ago.

FWA connection growth will remain robust in the U.S. as T-Mobile and Verizon expect to reach a total of 12 million and up to 9 million customers, respectively, by the end of 2028. FWA development in the U.S. will be aided by factors including new rules for the Broadband Equity, Access and Deployment (BEAD) Program that are more favorable to FWA as well as the establishment of an 800MHz pipeline of midband spectrum under the One Big Beautiful Bill Act, which will create more capacity to support FWA.

Other regions are experiencing significant growth in FWA customers, including Europe and the Middle East and Africa. India is also a prime market for FWA due to its limited broadband infrastructure as Reliance Jio reached 5.6 million 5G FWA connections as of March 2025 and aims to add 1 million new 5G FWA connections monthly.

Investments in 6G are likely to be muted due to uncertain ROI

TBR expects CSPs will be reluctant to invest in large-scale 6G infrastructure deployments when the time comes because they are still struggling to generate a ROI on their 5G investments. CSPs will be focused on monetizing existing 5G investments into the 6G cycle as clear use cases and tangible ROI will need to be evident before 6G is deployed at scale.

The above sentiments were captured by a joint statement issued by the Next Generation Mobile Networks (NGMN) Alliance, a consortium comprised of about 20 global operators as of August. The document includes statements such as the following: “6G standards must be globally harmonised. It is expected to be built upon the features and capabilities introduced with 5G, alongside new capabilities to deliver new services and value. Such technological evolutions should be assessed with respect to their benefits versus their associated impact. 6G standards must learn from the mistakes of 5G, including multiple architecture options, features that are never used and use cases that have no market pull. … The industry needs to develop solutions that have tangible pull from potential customers, as there is increasing concern from operators about the affordability of investment in networks for the sake of technology development.”

TBR believes enterprises are likely to lead in 6G adoption over CSPs as they have more use cases to justify 6G investment, especially in regard to private networks in areas including manufacturing and heavy automation facilities. TBR expects the level of government involvement in the cellular networks domain (via stimulus, R&D support, purchases of 6G solutions and other market-influencing mechanisms) to significantly increase and broaden, as 6G has been short-listed as a technology of national strategic importance.

The commercial deployment of 6G-branded networks will likely begin around 2030 (following the ratification of 3GPP Release 21 standards, which is tentatively slated to be completed by the end of 2028). However, it remains to be seen whether 6G will be a brand only or a legitimate set of truly differentiated features and capabilities that bring broad and significant value to CSPs and the global economy. Either way, the scope of CSPs’ challenges is growing, and governments will need to get involved in a much bigger way to ensure their countries continue to innovate and adopt technologies deemed strategically important.

Global CSP spend on 5G infrastructure is growing slowly following a dip in 2024 as CSPs reassess their capital allocation and become more conservative

A pull forward of capex into 2023 in the U.S. and India resulted in a decline in CSP 5G capex in 2024, but slow growth will resume in 2025 as CSPs gradually deploy additional 5G base stations for coverage and capacity as well as roll out 5G SA and 5G-Advanced technologies.

Though some CSPs will continue to test and commercially deploy the newest technologies for 5G, most CSPs are in no rush to deploy 5G SA or 5G-Advanced due to the lack of ROI-positive B2B use cases.

FWA is one key area that will receive increased attention and investment through the forecast period as more CSPs legitimize the technology as an economically viable means of bridging the digital divide and bringing more competitive broadband services to existing markets that have fixed access.

 

Operators remain slow in their transition to 5G SA, which is limiting revenue opportunities provided by areas including network slicing and 5G-Advanced

A continued lack of 5G SA deployments globally is a main barrier preventing the telecom industry from capturing new areas of value for their networks, such as B2B opportunities, network slicing and network APIs. However, many CSPs are hesitant to migrate to 5G SA due to uncertainty around ROI. According to the June 2025 Ericsson Mobility Report, out of the over 340 CSPs globally that have commercially launched 5G, only around 70, or about 21%, have commercially launched 5G SA so far.

Many CSPs are not in a rush to deploy 5G SA and are comfortable keeping their 5G Non-Standalone (NSA) networks for an extended period. Though 5G SA does provide some optimization benefits, such as throughput improvements to support data traffic increases, versus the NSA framework, many CSPs remain content with 5G NSA pending substantial, ROI-positive use cases that require the technology.

Limited 5G SA adoption will likewise hamper CSPs in implementing 5G-Advanced, which is dependent on 5G SA. Early deployments of 5G-Advanced began in 2024 and gradually expanded in 2025. 5G-Advanced will provide CSPs with benefits including faster data speeds, reduced latency and the ability to support use cases in areas such as AR/VR, edge computing and IoT.

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Persistent TIS revenue contraction will cease in 2025 as growth catalysts emerge

While TIS revenue continued to shrink among the vast majority of benchmarked vendors, TIS operating margins continue to recover as the business mix becomes more favorable and India’s coverage builds wind down

Aggregate telecom infrastructure services (TIS) revenue among benchmarked vendors declined 4.8% year-to-year in 2Q24, falling across all segments and regions. All but six vendors saw TIS revenue decline year-to-year in 2Q24. Several vendors, including Nokia, Ericsson, Samsung and Ciena, are seeing sharply lower revenue in India as 5G RAN rollouts by Reliance Jio and Bharti Airtel have gone post-peak. This will create difficult comparisons for vendors through at least 3Q24. Huawei and ZTE are also seeing their maintenance revenue in India evaporate as their installed bases of LTE and optical equipment is replaced by trusted vendors.
 
Simultaneously, vendors such as Cisco, CommScope, Fujitsu, NEC, Nokia and Samsung continued to be hampered by U.S. Tier 1 communication service providers (CSPs) significantly reducing or shifting their capex budgets following a peak in spend in 2022. Lower spend on 5G RAN deployments in China, which also peaked in 2022, is impacting a narrow set of vendors, including China Communications Services (CCS), Ericsson, Huawei, Nokia and ZTE, as new deployments in the country are focused on capacity enhancement, which is typically less intense from a TIS perspective.
 
The shift that is occurring as CSPs wind down their 5G coverage rollouts in the key countries of China, the U.S. and India and focus on densification is helping drive operating margin growth. Declining deployment activity, which tends to carry the lowest margins among TIS segments, in these markets — especially India — is helping to improve operating margin.
 
In 2Q24 deployment services constituted 17.7% of aggregate revenue, down 110 basis points year-to-year. Benchmarked vendors’ aggregate TIS operating margin increased year-to-year for the third consecutive quarter, following six consecutive quarters of declines. Aggregate operating margin grew from 10.8% in 2Q23 to 11.6% in 2Q24.
 
TBR attributes the increase in large part to a favorable revenue mix, with maintenance services growing to 34.1% of aggregate revenue, up 100 basis points year-to-year. The 5G gear vendors have built out in the aforementioned countries over the past few years is leading to follow-on support revenue.

With CSP 5G spend post-peak in India, the U.S. and China, RAN-centric vendors universally saw their TIS revenue decline in 2Q24

 

 
2Q24 Total Benchmarked Revenue for IaaS and PaaS (Source: TBR)India-based IT services firms Tata Consultancy Services (TCS) (a Tier 1 supplier in 2Q24), Infosys, Tech Mahindra and Wipro are winning deals from CSPs to support their evolutions to digital service providers. These vendors are helping customers migrate network and IT applications to the cloud and implement new business models. These firms have recently been hampered in part by lower application integration spend as CSPs in key markets such as the U.S. and Europe adopted a cautious cash flow management posture and paused some digital transformation activity.
 
Like Tier 1 vendor Amdocs, Tier 2 vendor CSG is a SaaS-centric, primarily BSS-focused, company offering revenue management and digital monetization products in a scalable managed services model. CSG has expanded account share among key clients in the U.S. over the last several years — namely, cable operators Charter and Comcast — and abroad, particularly in APAC and with an unnamed client in CALA, where CSG is ramping up a relatively large BSS contract. CSG’s TIS revenue declined in 2Q24 due to lower revenue from an unnamed global telco in Europe.
 
Samsung has executed on significant 5G work for CSPs that are based primarily in the U.S., India, South Korea and Japan. Samsung’s TIS revenue declined year-to-year in 2Q24 due to slowing spend at Verizon, which is Samsung’s largest customer by revenue, as well as in India, where Samsung participated in 5G RAN rollouts for Bharti Airtel and Reliance Jio, though at lower levels than Ericsson and Nokia.
 
Like RAN vendors in India, Ciena’s TIS revenue in the country declined significantly as 5G-adjacent projects wound down. Ciena offset this decline with strong software-related services revenue growth in developed countries.
 

 

Vendor SL&C revenues largely declined as large-scale 5G and greenfield rollouts wound down and new network business models and arrangements proliferated

Site location and construction (SL&C) work is often subcontracted to local vendors (such as CCS) with better access to resources in a given area. The SL&C market is in decline as temporary gains driven by 5G deployments in China and the U.S. as well as some greenfield deployments have concluded.
 
Pockets of growth include fiber rollouts for broadband access, backhaul and/or fronthaul, and the deployment of small cells. However, the relative volume of spend on these tasks is significantly lower than that for traditional SL&C for macro cell sites.
 
TBR has a negative long-term outlook for the SL&C market as CSPs shift their focus to adding incremental capacity to their existing macro sites, partially offset by growing CSP investment in small cell sites. This densification primarily consists of software upgrades and/or requires adding new radios to existing sites. CSP consolidation also weighs on the SL&C market.
 
New network architectures and business models, including network-sharing arrangements, neutral host providers, satellites to provide coverage for rural and/or remote locations, and third-party infrastructure owners such as tower companies increasingly owning cell sites and promoting the colocation of operator equipment, also reduce the need for net-new sites.

North America TIS revenue continued to decline in 2Q24, but at an improving rate as growth catalysts begin to emerge, including in Canada, where recent M&A and vRAN investments are driving growth

Benchmarked vendors logged a 1.4% year-to-year decrease in aggregate TIS revenue growth in North America in 2Q24, a dramatic improvement from an 8% decline in 1Q24 as year-to-year comparisons turned more favorable and Ericsson began to receive meaningful revenue from its Cloud RAN rollout for AT&T.
 
Still, revenues declined due to numerous factors, including Verizon’s and AT&T’s C-Band rollouts being post-peak as well as T-Mobile’s build-out of its 2.5GHz spectrum being post-peak. In addition, CSPs are awaiting government funding before expanding their fiber footprints, and DISH drastically reduced spending in 2H23 and 1H24 after it reached a key coverage milestone in June 2023 and it neared bankruptcy before receiving new funding in 2H24.
 
TIS spend in the region is positioned to grow in 2025 as comparisons become more favorable and CSPs focus on building out fiber access, including by leveraging the BEAD Program, through which CSPs will receive federal funds that are currently being disbursed to states to bring broadband to the unserved and underserved.
 
The BEAD Program has seen numerous delays and will likely run through the mid-2030s, later than the original 2028 time frame. The program will benefit a somewhat different slate of vendors compared to the midband 5G build-out, as fiber will be the primary technology deployed. Nokia will be one of the biggest beneficiaries due to its embrace of Build in America requirements. Ciena will also benefit, due in part to its 4Q22 acquisitions of Benu Networks and Tibit. Meanwhile, Ericsson and Samsung will have no role in BEAD-related fiber deployments, though they could participate in fixed wireless access (FWA) build-outs.
 
5G development continues in Canada through measures including builds in the 3.5GHz spectrum band, BCE’s capital investment acceleration program, Telus’ vRAN build leveraging HPE and Samsung, and the replacement of equipment from China-based vendors. Tier 2 operators in Canada are also advancing their 5G strategies.
 
Canada CSPs are focused on deploying fiber across their footprints and will expand 5G services to new spectrum bands, including the 3.8GHz band, which Bell Canada began deploying in 1H24. Rogers’ acquisition of Shaw Communications is also driving spend due to investment commitments made by the merged entity and Videotron, which acquired a piece of Shaw.