East and Southern Africa Telecommunications Report Q3 2008

Consolidation is one of the overarching themes of the US mobile market at present, with a spate of acquisitions lowering the number of competitors in certain areas. Vodafone and Verizon-owned Verizon Wireless announced the acquisition of Alltel in June 2008, which will make it the largest mobile operator in the country once the merger is finalised and receives regulatory approval. The merger followed TMobiles acquisition of SunComs 1.1mn subscribers and AT&T boosting its market share through the acquisition of Dobson Communications. Rumours have also surfaced of a possible merger between Sprint Nextel and T-Mobile as well as MVNOs Virgin Media and Helio, which are looking to merge their services. As growth slows in the market and the battle for more subscribers intensifies, companies are increasingly looking at acquiring smaller operators in order to maintain growth. Although the market has grown at a steady pace for a number of years, the overall trend is downwards, as penetration rates look set to reach 90% by the end of 2008.

However, the mobile sector continues to dominate the telecoms market, with mobile substitution continuing to erode the fixed-line market. It was estimated that 12mn homes in the US only use wireless voice services and Verizons triple-play bundle of mobile, broadband and pay-TV takes advantage of this trend. It also serves to highlight the growing movement away from fixed-line services, as operators across the industry report falling wireline revenues. Broadband services provide more and more revenues for companies and cable operators, and upgrading networks is a priority. Verizon has been deploying its fibre-optic network in the states, offering IPTV services, as well as broadband. Competing with cable operators is key to the wireline sector, as it is these operators that have been reducing the bell companies market shares.

Broadband is the focus for many operators, and new technology is key to its development. Sprint and Clearwires joint venture was finalised in February 2008, with additional financing from Intel, Google and cable companies. Clearwire stated it expected 30.8mn WiMAX subscribers by 2017 and is investing heavily in its network. The forecasts came as the US wireless industry trade organisation, CTIA, stated that wireless broadband had a significant effect on the US economy, and the regulator has said it is looking to address concerns over potential bottlenecks. With one WiMAX network set to be launched in 2008, BMI expects rival operators will not be far behind in launching their own next generation broadband networks, while Clearwire has already indicated its interest in European markets, where it already owns spectrum suitable for WiMAX launches.