Over the next few years, enterprises are expected to witness an exponential growth in private cellular networks, with projections indicating an increase to over $7 billion annually by 2028, a dramatic rise from the $2 billion expected by the end of 2024. According to research conducted by Kaleido Intelligence, the manufacturing sector will be the primary driver of this growth, deploying more than 5,000 private networks by 2028 and accounting for 27% of all such deployments. Although the energy and utilities sectors will also see growth in private network adoption, their progress will be comparatively slower due to longer product cycles inherent in these industries.
Private networks, particularly those utilizing the flexible architecture of 5G technology, offer diverse deployment options and foster various business collaborations. This flexibility is expected to be a crucial factor in their adoption, with over half of all private networks anticipated to be 5G-enabled by 2027, growing to 66% by 2028. The report accentuates the experimental nature of private networks, both for the enterprises that implement them and the vendors that supply the technology. Additionally, operational expenditures (Opex) are forecasted to rise at a compound annual growth rate (CAGR) of 56%, substantially outpacing the 33% CAGR for capital expenditures (Capex). This trend is underlined by innovative business models adopted by mobile network operators (MNOs) to recoup their 5G investments, as well as by specialized vendors offering bespoke solutions.
The rise in Opex spending is a reflection of the ongoing experimentation and innovation within the private network space, a necessary phase as businesses and vendors seek to optimize their operations and derive maximum value from the technology. Moreover, the flexibility offered by 5G technology—enabling a wealth of deployment options and facilitating partnerships across different business sectors—magnifies its appeal, making it a cornerstone of future private network implementations. The ability to quickly adapt and scale network infrastructure, owing to the modular nature of 5G architecture, provides enterprises with a unique advantage in responding to ever-changing market demands and business needs.
The Role of 5G in Future Business Models
Over the coming years, enterprises are forecasted to experience significant growth in private cellular networks, with annual revenues expected to soar to over $7 billion by 2028, a notable increase from the anticipated $2 billion by the end of 2024. Research by Kaleido Intelligence identifies the manufacturing sector as the leading force behind this surge, with plans to launch over 5,000 private networks by 2028, representing 27% of all deployments. Energy and utilities will also adopt private networks, though at a slower pace due to their extended product cycles.
The adaptability of 5G technology, offering varied deployment options and fostering business collaborations, is pivotal in this trend. It is projected that over half of all private networks will be 5G-enabled by 2027, climbing to 66% by 2028. The report emphasizes the experimental phase that both enterprises and technology vendors are undergoing with these private networks. Furthermore, operational expenditures (Opex) are forecasted to grow at a compound annual growth rate (CAGR) of 56%, significantly surpassing the 33% CAGR for capital expenditures (Capex).
This rise in Opex highlights the innovation and experimentation within the private network domain, as businesses aim to optimize their operations and extract the most value from the technology. The modular and flexible architecture of 5G not only provides a variety of deployment options but also facilitates partnerships across different sectors, making it essential for future private network implementations. This flexibility allows enterprises to swiftly adjust and scale their network infrastructure, offering a unique advantage in meeting evolving market demands and business requirements.
