Wireless services will drive revenue growth in the U.S. telecommunications industry even as wireless margins languish, according to a new forecast from Moody's Investor Service. Operating profits in U.S. telecoms will grow roughly 2 percent in 2016, Moody's predicts, while wireless revenue will likely grow 3 percent to 4 percent.
"Data revenue in the wireless services segment will fuel overall telecom growth, driven by the increasing use of smartphones, tablets and other connected devices, as well as the growing popularity of mobile video that has made larger data plans more alluring," said Moody's Senior Vice President Dennis Saputo in a prepared statement.
Moody's warned, though, that increasing competition will result in pricing pressure that will prevent substantial growth in wireless margins.
That growth is expected to come even as the smartphone market inches closer to the saturation point in the U.S. Analyst Chetan Sharma recently reported smartphone penetration in the U.S. has climbed to 81 percent, and smartphones now account for an estimated 97 percent of new handsets sold. Predictably, postpaid phone additions -- the longtime cornerstone of the U.S. mobile market -- have slowed substantially over the last two years, according to Jackdaw Research.
- see this Moody's report (sub. req.)
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