The wireless industry is quickly following the wireline market with a handful of large operators dominating the market, according to independent credit rating agency Standard & Poor’s. With the latest round of merger and acquisition activity fully under way, S&P claims the industry’s soon-to-be four nationwide operators will serve close to 85 percent of the U.S. industry’s total wireless subscriber base.
Cingular Wireless L.L.C. is currently the dominant operator serving more than 50 million of the industry’s 180 million wireless subscribers. Verizon Wireless is a close second with more than 43 million subscribers, followed by the combined operations of Sprint Corp. and Nextel Communications Inc. serving approximately 40 million customers and T-Mobile USA Inc. with more than 17 million subscribers.
Add in super-regional carrier Alltel Corp.’s more than 10 million wireless subscribers-following its pending acquisition of Western Wireless Corp.-and U.S. Cellular Corp.’s 5 million subscribers and the nation’s six largest carriers will control nearly 90 percent of the U.S. market.
Despite fewer competitors, S&P said it expects competition to heat up as wireless carriers fight for market share.
“As of mid-2005, Standard & Poor’s sees growing competition as the remaining national carriers fight for market share,” said S&P wireless telecommunications equity analyst Kenneth Leon. “Increased competition is evident from wireless carriers’ service increases-higher handset subsidies and more minutes of use on monthly plans-to renew existing customers or acquire new subscribers.”
Leon also noted that with wireless penetration surging past 60 percent, carriers have increased their focus on customer retention as well as tapping into previously underpenetrated market segments such as prepaid services and the youth market.
