Ongoing telco supply chain issues boost circular economy

Equipment shortages are still plaguing operators, prompting them to turn to refurbished kit.

Nick Wood

April 25, 2023

3 Min Read
The metal chain is disconnected with the red-hot link, feeble link. 3d illustration

Equipment shortages are still plaguing operators, reportedly prompting them to turn to refurbished kit.

This is according to a survey published on Tuesday by TXO. It’s important to point out straight away that one of the areas this company specialises in is refurbished network equipment. Ergo, drawing attention to supply chain issues and positing refurbished kit as a solution is well and truly in its interest.

Nevertheless, disruption to the supply chain continues to be a very real concern for telcos. A little over a week ago, for instance, the Financial Timesreported (paywall) that BT last year held ‘war games’ to simulate the potential effects of a conflict between China and Taiwan on its ability to procure equipment. According to research firm TrendForce, Taiwan accounted for 64% of the global chip foundry market in 2021. An altercation with China could easily stymie the flow of chips to the network ecosystem.

These problems aren’t just hypothetical though. According to TXO’s survey, 85% of operators said project timelines have been disrupted recently due to supply chain issues, with 34% experiencing a delay of six months or more. Costs are rising as well, with 54% of respondents reporting price increases of 11-30%.

Other knock-on effects are being felt, with 42% of operators claiming that customer satisfaction has been compromised, and 39% saying it has affected revenue. 45% warned that network performance is also suffering.

“The supply chain crisis is having a significant impact on global telecom operators, from delays in sourcing new equipment to cost increases. It’s clear this is damaging new business pipelines, revenue, network performance and customer satisfaction,” said TXO chief exec Darren Pearce, in a statement.

“At the same time, operators are under pressure to extend connectivity and meet government targets for 5G and fibre network deployments. While many are wary about scaling up their equipment rollouts due to the huge supply chain delays and costs, the upcoming government deadlines are putting additional pressure on them to find alternative solutions,” he continued.

“As a result, ‘sustainability considerations’ are becoming an increasingly important factor when selecting a new supplier.”

TXO’s survey found that 38% of operators are shopping in the refurbished equipment market in an effort to overcome shortages. 32% said they don’t currently use the circular economy, but are considering it.

While sustainability is growing in importance, cash is still king though when it comes to choosing suppliers, with 92% of respondents citing cost as their main consideration. This is followed by lead times (83%) and company reputation (58%). A mere 55% consider sustainability important, although TXO claims this represents an increase.

The fact that cash is still king also works in the circular economy’s favour. With supply chain issues driving price rises, 82% of operators told TXO they would consider sourcing refurbished kit if it helped them to rein in costs.

“By joining the circular economy and buying pre-owned equipment instead of new, operators can avoid the long wait for new equipment, save money and accelerate deployment in line with government targets,” said Pearce.


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About the Author(s)

Nick Wood

Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.

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