U.S. Core Wireless Services Remain Strong; Recession Impacts Expected in '09

According to Fitch Ratings' latest biannual wireless report, wireless results continue to demonstrate that core wireless services are relatively recession resistant and are best positioned to withstand economic pressures when compared to other telecommunication services. In addition to being viewed by consumers as a necessity-type service, recent growth for wireless communications has been fueled by aggressive smartphone promotions and strong uptake of data services.

However, Fitch believes that as the recession deepens over the next several months, the churn rate will increase as businesses continue to cut back on employment, and some postpaid consumers could be forced to consider limiting discretionary services associated with data plans or potentially switching to unlimited prepaid calling plans. Consequently, Fitch expects operators to report net addition pressure from subscriber losses in the enterprise/business segment, particularly from financial services, due to the weak labor market. Therefore, key themes in 2009 are centered on data and prepaid services as well as the uncertain impacts from a deteriorating economy and rising unemployment.

As well as the above commentary, further important statistical measures of the U.S. wireless industry can be found in Fitch's biannual wireless report. The report aggregates numerous operational and financial measures representing more than 90% of industry subscribers including key metrics for gross additions, subscriber growth, ARPU, revenue, profitability and capital spending. In addition, the report summarizes key developments within the industry during the past two quarters.

The full report is available on the Fitch website (registration required).

Posted to the site on 19th April 2009