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IN DEPTH: The Top Operators by Subscriber Base in North America

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Note -- this news article is more than a year old.

The North American mobile market has not changed significantly since our last quarterly review. The ten largest companies, which account for the vast majority of subscribers in the region, have maintained their relative positioning over the quarter, as AT&T heads the table with 71.4m customers, ahead of Verizon (67.2m), Sprint Nextel (52.8m), T Mobile (30.8m), Alltel (13.2m), Rogers and Bell Mobility from Canada (7.4m and 6.3m), US Cellular (6.2m), Telus, the third Canadian company (5.7m) and MetroPCS (4.4m). In fact, the only change over the year is that Bell Mobility has edged ahead of USC by about 50k subscribers to take the seventh place on the list.

This is not to suggest that the market has been unexciting - far from it.

The last year has seen a significant amount of M&A activity, with AT&T buying Dobson Communications, Verizon buying Rural and T-Mobile buying Triton. The net effect is that while the overall ranking may not have changed much, the relative positioning has changed quite markedly. One year ago, Verizon had closed in on AT&T's lead such that the gap between the two was down to just 1.5m. At the end of Q1 08, this had nearly tripled to 4.2m. AT&T's lead over Sprint, the third placed operator, has more than doubled over the year, from 8.6m to 18.6m, increasing by 2.4m in this last quarter. The gap between the market leader and the number four, T-Mobile, has also widened, from 36.2m to 40.6m.

In recent weeks rumours have circulated suggesting that T-Mobile was planning to acquire Sprint Nextel. Such a combination would create a new market leader, with nearly 84m customers... but as these would be using three separate technologies it would be hard to extract significant benefits in the short term. T-Mobile is the smallest of the big four, with only 30.8m customers, but unlike Sprint, it is adding to this base quarter by quarter and may prefer to acquire Sprint's customers rather than its business.

Moving from rumour to fact, the news that Verizon is to acquire Alltel suggests that there will be a new market leader this time next year. The two have more than 80m customers as of today, enough to open up a 9m gap between the enlarged entity and AT&T. As none of the smaller operators listed here use the GSM technology AT&T favours, it has no ready made response to this, though we would expect it to close the gap somewhat as the advantages of GSM begin to be felt.

The second chart shows the net additions achieved by the leading operators over the last 12 months. AT&T heads the list with 9.15m, helped in part by the acquisition of Dobson. Verizon's 6.46m is similarly assisted by the Rural Cellular acquisition, while third placed T-Mobile also benefited, with Triton accounting for just over 1m of its 4.78m total. The chart also illustrates the gravitational effect that scale brings - of the other seven entities shown here, only Alltel (+1.11m) and MetroPCS (+1.02m) managed to add more than a million new connections. Another way of looking at this is that taken together, the third to tenth companies on this list only managed to match the net additions gained by AT&T. The last quarter numbers see the top three changing places, with T-Mobile (+2.11m) beating both Verizon and AT&T which added 1.47m and 1.32m respectively. No other operator managed to add more than 500,000 connections, though MetroPCS came close with 0.45m.

Finally, the proportionate growth shows a rather different picture. Over the course of the last year, MetroPCS has grown by 30%, substantially more than the overall industry growth rate in North America. Leap Wireless, with 21.3%, is second. During the course of the last year, MetroPCS approached Leap with the suggestion that the two merge, but the offer was turned down. Together, the two would have had near national coverage of the urban areas and also something approaching critical mass.

It is notable that none of the Canadian companies have made much of an impression on these lists. The mobile market in Canada is even less well developed than that of the USA and none of the three largest players in Canada has really troubled the scorer, as it were. In the last year, Rogers headed the growth list, with 0.57m additions, ahead of Telus with 0.51m and Bell, which added 0.43m. The first quarter of 2008 doesn't give any reason to anticipate much of a change, as together the top five Canadian networks only added 0.21m new customers, equivalent to an additional 0.6% penetration.

Customers, EOP Q1 2008

Net Additions, year to 31st March 08

Proportionate Growth, year to 31st March 08

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