North America was the first region to be affected by the current
and, to date, has been the hardest hit. Although the full effects of the
are yet to be felt, the wireless operators’ results in the third quarter
how mobile services have become indispensable and two-year contracts are
the sector in the region. Mobile telecom remains on track to grow in the
Demand continues to power growth -except at Sprint
Both the US (85% in 2007) and Canada (60%) have low mobile penetration
relative to other mature economies, meaning that demand for mobile
services has not
yet been fully met and connections growth is still possible.
The US added 3.9 million connections in the third quarter and
connections growth was 10%. Significantly this growth was not limited to the
largest players. Only Sprint saw a decline in connections in the third
(another 1.3 million) -a decline that helped the other operators
continue to grow
Canada’s national wireless operators also saw continued connections
Rogers’ connections base growing 8% year-on-year, Bell Canada by 7% and
Postpaid emphasis reduces risk moving forward, but prepaid is an opportunity
Also significant is the fact that in the US 79% of connections in the
were postpaid, with Canadian operators reporting even higher figures.
The risk of
these connections defaulting on their contract should be reduced,
eradicated. There is always the risk that contract customers will be
when renewing a contract in 2009, but from a net additions perspective,
these customers will be here for 2009.
As North America has relatively low penetration, prepaid could actually
opportunity for North American operators in 2009, as shown by T-Mobile’s
in prepaid subscriptions in the third quarter. Assuming offerings are
carefully so as not to erode contract revenues, then the customer base
further in the currently underserved lower end segment.
Financials look strong too -except at Sprint
Financial indicators for the North American wireless market also looked
the third quarter. AT&T, Verizon Wireless, T-Mobile and Metro PCS in the
Rogers Wireless in Canada all reported double-digit revenue growth, with the
remainder in the high single digits, including US MVNOs Tracfone and
Sprint was the only operator to mention ?tough economic times’ in its
reported a 13% year-on-year revenue decline.
Margins, where reported, saw no adverse effects due to economic
although the full picture will be revealed in 4Q08 and 1Q09. In 3Q08 the
high-profile margin erosion came from AT&T and Rogers Wireless as a
iPhone subsidies, but this will aid profitability in 2009.
Data lift-off offers growth potential
The North American market also reported stunning growth in mobile data
Admittedly this is from a small start, but the demand for mobile data
continuing into 2009, even if it proves to be less than what was
months ago. Just a few metrics serve to illustrate this point: Telus
data revenues by 56% year-on-year, AT&T by 51% and Verizon by 43%.
The above leads us to reiterate our outlook for North America in 2009.
We feel that
the North American mobile market will escape catastrophe as a result of
macroeconomic conditions in 2009 and will continue to grow, albeit not
at the rates
we have seen in 2008.
The region’s relatively low penetration has stimulated growth to date.
increasing saturation means that segments currently unserved by wireless
to be those most affected by the economic conditions. Therefore, our
regional and country forecast pack: 2007-13 predicts a 6.3% rise in both
connections and revenues in the US from 2008 to 2009. In Canada it is
connections and 11.3% for revenues.
Ovum’s newly published ?Mobile Regional and Country Forecast pack
detailed results of our ongoing forecasts of total, prepaid, voice and data
connections; connections by technology; total, voice and data ARPU &
minutes of usage.
Ovum’s Mobile team has also published a ‘Wireless Connections Forecast Pack
2007-13’ detailing total and prepaid connections and penetration
globally and by
region, a ‘Wireless Voice and Data Forecast Pack’ detailing total voice
connections; total voice and data ARPU and revenues, and minutes of
usage, and a
Wireless Technology Split Forecast Pack 2007-13 showing connections by
For additional details or to speak with Steven Hartley about this
contact Sara Kaufman, Ovum Public Relations, [email protected], 617
or a member of our global PR team listed below.
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to retained and project clients. The company acts as a well-respected
source of industry data, knowledge and expertise on the commercial impact of
technology, regulatory and market changes. Ovum engages in continuous
industry analysis to determine market dynamics in its specialist sectors.
Ovum has developed long-standing relationships with many of its
which include major international blue-chip companies such as
BT, Cable & Wireless, Cisco Systems, Deutsche Telekom, Fujitsu, HP, IBM,
Telstra and Vodafone.