Mobile industry recession proof in the US

Stan Beer
Sunday, 23 November 2008 13:14

IT Industry - Market

While the US appears to be headed for the worst economic recession in decades, the mobile telecommunications industry appears to be immune, according to the latest research. In fact, according to communications industry analyst firm Ovum, the US mobile telecoms sector is headed for solid growth in the coming year.

The full effects of the downturn are yet to be felt in the US, but wireless operators’ results in the third quarter reflect how mobile services have become indispensable and two-year contracts are protecting the sector in the region, according to Ovum.

Steven Hartley, Senior Analyst at Ovum, says that Ovum forecasts mobile connections and revenues will rise 6.3% in the U.S. from 2008 to 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," Mr Hartley says.

"The region’s relatively low penetration has stimulated growth to date. However, increasing saturation means that segments currently unserved by wireless are likely to be those most affected by the economic conditions. Therefore, our latest ‘Mobile 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 7.5% for connections and 11.3% for revenues.”

Paradoxically, one of the major factors behind the bullish outlook in mobile telecoms for North America as whole, according to Ovum, is that the market lags behind the rest of the developed world in mobile adoption.
 
"Both the US (85% in 2007) and Canada (60%) have low mobile penetration rates, relative to other mature economies, meaning that demand for mobile services has not yet been fully met and connections growth is still possible," Mr Hartley says in his note.

"The US added 3.9 million connections in the third quarter and year-on-year total connections growth was 10%. Significantly this growth was not limited to the largest players. Only Sprint saw a decline in connections in the third quarter (another 1.3 million) – a decline that helped the other operators continue to grow strongly.

CONTINUED Page 2