Subscriber Gains Continue for North American Wireless Industry

Youth, family and reseller plans are driving strong gains in gross additions for the North American wireless industry as industry trends experienced in 2005 continue through Q1 of 2006, according to Fitch Ratings. Postpaid churn showed further improvement given operators targeted capital investment and retention strategies. Industry margins improved 300 basis points to 32% in Q1 2006, and total aggregate revenue grew 15% year-over-year to $32.1 billion. Subscriber growth continues to be steady, with robust data revenue growth mitigating voice average revenue per user (ARPU) erosion.

Fitch believes the wireless industry will continue to improve profitability and cash flow yields over the next few years. Fitch also believes the underlying credit quality of wireless carrier operations has increased despite the increasing mix of prepaid gross additions, as postpaid subscribers generate the bulk of the service revenues.

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Posted to the site on 13th June 2006