subscriber growth

Study says mobile sector booming despite financial turmoil

Sue Marek — Tue, 23 Sep 2008 12:12:45 -0400

A study by Portio Research says that the worldwide mobile industry appears to be resilient to the financial turmoil that many other industries are experiencing. The top growth markets for wireless are China and India (not surprising), which will contribute more than 1 billion additional subscribers between 2007 and 2013. Brazil is a distant third with 132 million additional subscribers expected by 2013.

However, the study did note that mobile voice and data revenues continue to decline with mobile ARPU expected to fall from $23.2 in 2005 to $15.8 by the end 2013, largely because the additional subscriber growth will come from low per capita income markets.

For more:
- see this article

Related article:
China and India lead worldwide telecom carrier capex and revenue growth

Dell'Oro: CDMA infrastructure market took a hit in 2Q

Lynnette Luna — Thu, 21 Aug 2008 20:19:52 -0400

The Dell'Oro Group says that the worldwide CDMA infrastructure market fell more than 25 percent from the year ago quarter as Verizon Wireless and Sprint cut back on CDMA spending. The firm says Verizon Wireless' capex was down about $150 million, while Sprint's capex was down nearly $1 billion. "As a result of this contraction in North America, North America's share of the CDMA market fell to approximately two-thirds share, from over three-quarters share in the second quarter last year. Growth in Asia Pacific, particularly in India, helped to offset these declines," said Scott Siegler, analyst with the group's Mobility Infrastructure group. "In the quarter, Reliance, Tata and BSNL continued to see solid CDMA subscriber growth and continued to invest in the growth of their CDMA networks. However, we believe the region will experience declines in the second half of the year, as we expect all three operators to begin to focus more capital towards their GSM networks." Release

U.S. Cellular sees strong data growth

Sue Marek — Thu, 07 Aug 2008 12:12:04 -0400

Regional operator U.S. Cellular seems to be benefiting from strong growth in data. During the second quarter, the company had a 45 percent increase in data revenues for a total of $123.7 million. The wireless carriers service revenues were also up 9 percent for a total of $987.4 million.

However, the company's subscriber growth slowed. Net customer adds were just 16,000 for the quarter, down from 74,000 in first quarter and down from 37,000 in the same quarter last year. Gross customer adds were 365,000 down from 409,000 in first quarter and down from 418,000 in the same quarter the previous year.

For more:
- see this press release

Related articles:
U.S. Cellular beefs up ARPU but net adds slow
U.S. Cellular subscriber adds increase 6%

Mark Lowenstein: How Will Wireless Be Affected by the Economic Downturn?

Thu, 17 Jul 2008 12:15:49 -0400

So far, the wireless industry has been relatively unscathed by the economic downturn. Operators reported solid first quarter numbers, spectrum auctions in the U.S. and Canada exceeded expectations, and there has been no pullback yet in capex plans. However, it appears that we are in store for sustained economic challenges, with real casualties across the financial, auto, and retail sectors--and the first bear market in some time. The new reality of commodity pricing is having a measurable impact on consumers' pocketbooks. So as we move into the second half of the year, it's worth a closer look at whether, and how, the wireless industry might be impacted.

It should first be recognized that the economic troubles are more acute in certain countries, so the fact that wireless is a global industry is an important insulator. Equipment and handset manufacturers are benefiting from the engines of a select number of important geographies that are still racing to build out or upgrade networks and are seeing steady organic subscriber growth.

Stateside, I believe the industry has taken some important, and uncharacteristically proactive steps as a hedge. For example, the "unlimited" plans are getting more customers into predicable, post-paid pricing plans and have greater potential for voice ARPU stabilization/accretion than dilution. Additionally, having more customers in these sorts of plans potentially reduces costs, as there are fewer calls into customer care. Concerns about the economy plus financial market realities have also accelerated the pace of industry consolidation, most notably Verizon-Alltel and Virgin-Helio--and might have kept some "new" industry players from going too far in the 700 MHz auction. The pricing of the 3G iPhone is also a nod, in part, to economic jitters, recognizing the sub-$200 price point that seems so critical for mass market adoption of a wireless device.

So far the wireless industry has held up pretty well. But what happens if the economic situation worsens or is prolonged? Well, we won't see wireless subscribers giving up their subscriptions. Cellular has become a "must have" for just about everyone. In fact, wireless subscriptions could see an initial uptick, as households consolidate their number of "lines." For example, much of the fixed access line loss to date has come from households switching their second line over to mobile and/or broadband. If the economy continues to be poor, we could see more households take out their remaining fixed voice line in favor of mobile.

What would be most affected are the "nice to have" categories. Today's "must haves" in the communications universe are a mobile phone and a broadband connection. For 30 percent to 50 percent of the wireless market, I would argue that SMS is a "must have," because of its pervasiveness in certain segments, and its role as a substitute for more expensive services such as mobile email or additional voice minutes. The "nice to haves" in wireless compete more directly with the myriad devices, services and entertainment options in today's digital universe. Consumers might have to start prioritizing. My view of the areas most likely to be affected includes:

Handset replacement rates. U.S. handset replacement rates average 1.7 years--among the most aggressive in the world. A slowdown in the handset replacement rate would be a natural result of consumer caution, and could affect the 2008 holiday season, for starters.
3G Broadband subscriptions. Mobile broadband subscriptions have grown at a 50 percent or greater annual clip for several years running. This market could start running out of steam if times are difficult. It is a "need to have" among the mobile professional set, and there is still room for growth there. But consumers represent an important growth segment for mobile broadband, and they might choose to consolidate around a more capable smartphone and look harder for (the growing number of) free hotspots. Operators will have to offer more flexible pricing for broadband access, for example better options for "occasional" use.
Mobile applications. We have already seen a leveling off in the growth of personalization applications such as ringtones and wallpaper. Mobile gaming has been stagnant. The most vulnerable categories, in my view, are those that require an ongoing subscription. Consumers might start looking hard at the value they are deriving from the "add-ons" that cost $5.99 for this and $10.99 for that. If, in their digital universe, they have to choose between DVR service and Mobile TV, what do you think they're going to do? We are likely to see a migration to more of a "cable industry" model for pricing, where $20-25 buys you a pretty broad swath of services--messaging, email, location, browsing--with premium content available on a "pay per view" basis.
Appetite for risk. When times get tough, you focus on the fundamentals. Operators will be less willing to take risks on new applications, and will be more cautious with initiatives that are high on the risk/reward scale.

There are a couple of longer-term effects that I can see happening. First, I think there will be even greater-than-usual pressure on suppliers. We have already started to see a slight decrease in handset ASPs--this despite a growing percentage of smartphone sales. There will also be an opening for equipment vendors with particularly aggressive pricing. Second, if wireless does start to show visible effects from the economic downturn, we could see a reduction in capex spending plans. 3G might not get as widely built out, there could be less need to increase data network capacity, and we could see a delay in 4G rollout plans.

Of course, in every cloud there's a silver lining and we could see some uncharacteristic winners emerge from an industry downturn. Operators, in an attempt to avoid an all-out price war, will introduce more flexible pricing options, such as bigger bundles of data services, better plans for occasional use, and a renewed focus on prepaid. A slowdown in mobile data adoption could spur the development of advertising-oriented business models for mobile content. Smartphone sales could also benefit, as these devices represent an increasingly viable option for consolidating multiple functions on a single multi-purpose device. And vendors who have had difficulty cracking the relative oligopoly that characterizes many segments of today's market (handsets, network equipment, billing systems) might have an unprecedented opening.

We'll know a lot more in six months.

Mark Lowenstein is Managing Director of Mobile Ecosystem. He can be reached at mlowenstein@m-ecosystem.com. Click here to subscribe to his Lens on Wireless newsletter, including the latest issue, "The iPhone Effect: Ten Hidden Themes."

T-Mobile USA crosses 30M subs

Thu, 08 May 2008 06:59:58 -0400

T-Mobile USA reported first-quarter net income of $462 million, up from $315 million a year ago--service revenues increased 14 percent to $4.57 billion from $3.99 billion in Q1 2007, growth the operator attributed to an increase of contract customers.

Net Subscribers: T-Mobile USA added 981,000 new customers during the quarter, crossing the 30 million subscriber mark.

Churn: The carrier's average monthly rate of churn fell to 1.7 percent during the quarter, down from 1.9 percent a year ago.

ARPU: Average revenue per user (ARPU) slipped to $51, a $1 decline from last year.

Data services revenues were $760 million in the quarter, accounting for 16.6 percent of ARPU or $8.50 per customer, up from 15.8 percent/$8.20 in the fourth quarter of 2007 and 14.3 percent/$7.50 in Q1 2007. The company said messaging revenues remain the primary driver behind data growth: The operator reported that SMS and MMS swelled to 33 billion in the first quarter of 2008, compared to 24 billion in the previous quarter and 16 billion a year earlier. T-Mobile USA cited the popularity of its myFaves unlimited rate plan as a major catalyst behind its messaging growth.

Technology Business Research analyst Ken Hyers noted that if the newly acquired 1.13 million SunCom subscribers are removed from T-Mobile's quarterly additions, year-to-year growth shrinks to only 14 percent, which is the slowest year-to-year subscriber growth yet for the carrier.

For more:
- read this release about T-Mobile USA's Q1 results

Sprint's iPhone-killer: Hardly a killer Instinct?

Mon, 07 Apr 2008 06:59:59 -0400

Sprint's iPhone-killer: Hardly a killer Instinct?

One notable trend that emerged from last weeks' CTIA 2008 trade show in Las Vegas and one that has been going on for some time is the iPhone-look-alike contests that vendors are engaging in. It's no wonder when AT&T reports surges in subscriber growth and a number of surveys point to the fact that the iPhone is driving data usage.

Will vendors and their operator partners manage to take a bite out of the Apple iPhone pie?

The latest entrants last week were Sprint and Samsung, which introduced the Samsung Instinct. In June, Sprint is planning a huge marketing push around the device, which looks quite similar to the iPhone in terms of a touch screen and form factor. Sprint spent 9 months working in partnership with Samsung and other experts to get the user interface consistent with the iPhone, said David Owens, director of product commercialization with Sprint.

Sprint believes the Instinct has some primary differentiators over the iPhone: the fact that the device operates over 1xEV-DO Rev. A versus slower EDGE, a cheaper pricing point (close to $200) and features like integrated navigation applications.

Still, despite the improved features from competitors and even lower pricing points, it's awfully difficult to compete against an icon like Apple. The iPhone is doing what the iPod has done during the last five years: It is successfully tying a usability story into a fashion story. That ability gives Apple the power to take the attraction to the iPhone to an entirely different level that other handset vendors have difficulty replicating.Ã‚Â

It appears that vendors and operators will battle it out among themselves over who has the best iPhone look-alike device, but will have difficulty touching the iPhone itself. -Lynnette

Report: 133M WiMAX subscribers by 2012

Mon, 31 Mar 2008 07:59:54 -0400

The WiMAX Forum today released its projections for global WiMAX subscribers. The forum estimates more than 133 million WiMAX subscribers by 2012. The forum commissioned an independent research study that will be published next month.

In addition, the study estimates that about 70 percent of the forecasted WiMAX subscribers will use mobile and portable WiMAX devices to access the Internet by 2012. According to the study, the key driver of WiMAX subscriber growth will be adoption of the technology in Asia Pacific and the Americas. -Lynnette

SPOTLIGHT: Report: Top emerging markets

Thu, 13 Mar 2008 07:59:52 -0400

FierceWireless:Europe has put together a special report on the top emerging markets based on subscriber growth during the past year. Check it out here.

Clearwire adds 47,000 subscribers

Tue, 04 Mar 2008 06:59:58 -0500

Clearwire's fourth quarter results show that the carrier has increased revenue to $45.4 million, up from $23.7 million a year ago. During the quarter Clearwire's net subscriber additions totaled 47,000, bringing its total subscriber base to 394,000. During the fourth quarter of 2006 Clearwire had 206,000 total subscribers. Despite the subscriber growth, however, ARPU fell 30 cents year-over-year: It was $36.09 for the fourth quarter in 2007, down from $36.39 in Q4 2006. Clearewire's churn rate increased to 2.4 percent, up from 1.9 percent in the year ago period.

Pali Research's Walter Piecyk wrote in a research note today that the carrier "is essentially in a holding pattern as it negotiates a transaction with Sprint of the potential combination of their WiMAX assets and seeks an investment to fund the buildout of a nationwide WiMAX network." Piecyk noted that the near term results are weak but irrelevant since the carrier is in "cash conservation mode."

For more on Clearwire's Q4:
- read this article from the AP

Virgin Mobile previews weak Q4 results

Mon, 04 Feb 2008 06:59:57 -0500

Virgin Mobile USA pre-announced weak fourth quarter results with net additions of 210,000 and a churn rate of 5.1 percent. Pali Research analyst Walter Piecyk had expected the MVNO to post about 360,000 net new subscribers and a churn rate of 5.4 percent. Virgin Mobile USA claimed that increased handset pricing pressure from AT&T and T-Mobile USA and Leap's recent $25-per-month promotion plan as reasons for the weaker than expected results.

"Verizon and AT&T have already been increasingly successful in pre-paid by offering free unlimited in-network calling for its customers including calls to post-paid customers," Piecyk wrote in a research note. "The success has offset a slowdown in their post-paid subscriber growth. If Sprint gets more aggressive in pricing on the post-paid side of the business it could lead to Verizon and AT&T leaning more heavily on the pre-paid market."

For more on Virgin Mobile USA's results:
- read this press release

Related:
Virgin Mobile USA announce Bob Stohrer as new CMO

Small operator extinction

Fri, 21 Dec 2007 06:59:54 -0500

Over the past year we saw many operators snatch up smaller players in an effort to increase their footprint and continue their strong subscriber growth. It's clearly more economical for large operators to deploy new technologies in rural markets than for small operators with tiny footprints and less buying power.

Some purchases were quite small such as Leap buying Hargray Wireless for $30 million, Verizon Wireless snapping up Ramcell for an undisclosed amount and AT&T purchasing its remaining stake in Edge Wireless, a long-time affiliate in the Pacific Northwest. Others were more substantial such as AT&T acquiring Dobson Communications for $2.8 billion, Verizon buying Rural Cellular Corp. for $2.67 billion and T-Mobile USA snapping up SunCom Wireless for $2.4 billion.

For vendors the shrinking base of Tier 2 and Tier 3 carriers means fewer customers to buy their equipment. Obviously if you're a vendor with a Tier 1 customer base, this isn't a problem. But for smaller vendors, the Tier 3 carriers often offered them a chance to get a foothold in the market. -Sue

Virgin Mobile USA faces class action lawsuit

Tue, 27 Nov 2007 06:59:56 -0500

Coughlin Stoia Geller Rudman & Robbins has filed a class action lawsuit against Virgin Mobile USA that alleges that Virgin Mobile and some of its executives violated the Securities Act of 1933 by failing to disclose in its IPO prospectus that the MVNO would report a widening loss and slower subscriber growth for Q3 2007.

In mid-October Virgin Mobile sold more than 27.5 million shares of common stock to the public for $15 per share, making for more than $412 million. According to the suit, on November 15, 2007, after the close of the market, Virgin Mobile issued a press release announcing its financial results for the third quarter of 2007, which included a loss of $7.3 million.

UPDATE: A Virgin Mobile USA representative wrote in to sayÃ‚Â that theÃ‚Â lawsuit is without merit and thatÃ‚Â the companyÃ‚Â plans toÃ‚Â fight the suit vigorously.Ã‚Â

For more on the suit:
- read the press release

CTIA: 243M mobile users in U.S.

Wed, 24 Oct 2007 06:59:57 -0400

CTIA president and CEO Steve Largent opened his organization's annual CTIA Wireless I.T. and Entertainment event with a quick pulse check of the industry's subscriber growth. According to Largent, as of June 2007 the U.S. wireless consumer market surpassed the 243 million subscriber mark, representing roughly 81 percent of the overall national population. In addition, U.S. subscribers now send an average of 1 billion text messages every day, transmitting 28.8 billion messages in June alone.

"This is an industry that continues to grow, continues to innovate and continues to diversify," Largent said.

In a follow-up press release CTIA said its recent survey found that wireless data service revenues for the first half of 2007 rose 63 percent year-on-year to $10.5 billion. Now data revenues account for 15.5 percent of all wireless service revenues. The survey also found that wireless subscribers in the U.S. sent 2.6 billion MMS messages during the first half of 2007, which is nearly twice as much as last year. The survey found that wireless customers used more than 1.1 trillion minutes in the first half of this year, up 18 percent year-on-year.

For more on the survey:
- read the press release

CTIA study: U.S. wireless subscribers nearing 250 million

Tue, 23 Oct 2007 16:12:45 -0400

CTIA president and CEO Steve Largent opened his organization's annual CTIA Wireless I.T. and Entertainment event with a quick pulse check of the industry's subscriber growth. According to Largent, as of June 2007 the U.S. wireless consumer market surpassed the 243 million subscriber mark, representing roughly 81 percent of the overall national population. In addition, U.S. subscribers now send an average of 1 billion text messages everyday, transmitting 28.8 billion messages in June alone. "This is an industry that continues to grow, continues to innovate and continues to diversify," Largent said. -Jason

ALSO NOTED: RIM in China, means 3G?; T-Mobile's timing for H@H; and much more...

Fri, 06 Jul 2007 06:59:50 -0400

> RIM's move to China may catalyze 3G rollouts. Article

> Mobile subscriber growth rate increased 73 percent to reach 157 million in 2006-2007, while fixed line subscribers have declined 3.3 percent. Article

> Analysis of the timing of T-Mobile's Hotspot at Home launch. Article

And Finally... Some people can't curb their enthusiasm for the iPhone. And if you're a veteran NYTimes columnist who's on Apple's shortlist for iPhone demo units, you make fanboy musical tribute videos. Apparently. Video

Metric: 2.6B global mobile subs this year

Tue, 14 Nov 2006 19:01:35 -0500

By the end of 2006 global mobile subscribers will total 2.6 billion, according to a report by iSuppli. Come 2010, that figure will rise to 4 billion, thanks to the advent of ultra-low-cost mobile phones. News subs in India and China are driving the rapid increase of mobile subscribers. The two countries make up half of the so-called BRIC (Brazil, Russia, India, China) group of developing markets.

For more on the mobile subscriber growth:
- see this article from TelecomAsia

Editor's Corner

Sun, 30 Jul 2006 20:01:40 -0400

Verizon is going to announced its second-quarter financial results tomorrow, and they are sure to make competitors cringe. Its wireless business has already reported 1.8 million net adds that were direct retail subscriber additions--that is, those customers the company directly serves and manages, not from MVNOs or resellers. And look for the company to report record low churn again. Cingular already reported financial results beat analysts' expectations, adding a surprisingly high 1.5 million net subscriber additions as well as the company's highest-ever net income of $540 million. The operator also pushed its churn rate down to 1.7 percent overall--another best-ever performance.

With the country's top two wireless operators reporting record results, Sprint Nextel has to be a bit nervous. Its stock is already way down--falling about 28% since peaking at $26.70 in early April, despite the insistence from analysts that investors are undervaluing the stock and overstating Sprint's higher churn. But there are some glaring facts that investors cannot ignore. According to John Byrne, analyst with Network Business Quarterly, the main concern is how to address flagging subscriber growth. In the first quarter, Sprint Nextel added just 563,000 postpaid retail customers under the Sprint and Nextel brands. By comparison, standalone Sprint and Nextel added 518,000 and 496,000 postpaid retail additions, respectively, in the first quarter 2005, which means postpaid retail growth was down 44.5 percent on a pro forma basis.

Analysts just last year were singing the praises of Sprint's strategy to embrace MVNOs and its prepaid youth brand Boost to bring in bigger subscriber numbers as they expected the market to reach saturation. But Verizon has shown that an operator can still bring in record numbers without such a strategy. MVNOs, in turn, have lost their luster in the market as many are bringing in lower-than-anticipated numbers. Meanwhile, Sprint continues to spread the gospel that prepaid and MVNO customers aren't bad customers, but it doesn't seem that investors are buying it. We'll see what the second quarter holds.

Also, amid the pounding CDMA technology has taken in recent weeks as some operators announce intentions to flip from CDMA to GSM and Lucent reports some slowing down of the CDMA market, the CDMA Development Group has issued a new CDMA2000 fact sheet on its web site designed to outline the various ways in which the technology has achieved leadership in delivering advanced performance to networks across the globe. - Lynnette

SPOTLIGHT: Merrill Lynch expects strong net adds in Q2

Thu, 29 Jun 2006 20:01:25 -0400

Merrill Lynch analysts have concluded another trek to U.S. phone and network retailers to determine how strong net adds are going to be in the second quarter. Lynch says volumes appear healthy for the quarter, with Verizon Wireless continuing to grab share across the board and Cingular performing well. Alltel also looks like it has some momentum. And Merrill Lynch believes T-Mobile is going to come up short on subscriber additions. The firm estimates that subscriber growth will slow, from 25.5 million net additions in 2005 to 23 million in 2006, for an ending subscriber growth rate of about 11 percent year-over-year and 77 percent penetration. Article

Fitch Ratings: Mobile industry will stay profitable

Tue, 13 Jun 2006 20:01:35 -0400

A new report from Fitch Ratings says that the U.S. mobile industry will continue to post profits even though prepaid and reseller additions are fueling much of the subscriber growth. That's because carriers are working hard on improving their postpaid churn and company margins. And data services are helping to stem losses in ARPU.

To read more about Fitch's assessment of the mobile industry:
- check out this article from RCR Wireless News

RIM's BlackBerry growth loses momentum

Wed, 28 Sep 2005 20:01:36 -0400

Research in Motion reported a 57 percent increase in second-quarter earnings and a 58 percent increase in its quarterly sales. The company expected higher sales and subscriber growth for the period but cited increased competition as the reason for not meeting their mark. RIM claimed its BlackBerry subscriber base grew by more than 620,000 users to nearly 3.7 million. The company hoped to add 650,000 subscribers during the past quarter. Insiders think customers could be waiting to get a look at the array of new upcoming mobile email solutions from Palm, Nokia and Motorola. RIM posted profits of $111.1 million on sales of $490.1 million for its second quarter, compared with last year's $70.6 million in profits from $310.2 million in sales.

For more on RIM's Q2 report:
- see this piece from the National Post