The Wireless Service Industry

• Currently over 470 million users.  (See Table 1).  

• Estimated to be almost 1.5 billion users by 2003.  (See table 1)

• Growth primarily centered in Europe, Asia, and to a lesser extent, North America.

• In the United States, growth has continued at a rapid pace (See Figure 2).

• Telecommunications spending will reach more than $1 trillion, while wireless communications is projected to reach $81.8 billion by 2002.

• Geographic Dispersion is shown in Table 1.  The results indicate that Europe and Asia are the centers of wireless service usage, while North America ranks third.  It also shows that Latin America and Africa will experience tremendous growth in the next five years.

• Because most telephone networks in nations have been regulated or controlled by government for so long, and because wireless service and their equipment must be located near consumers, wireless service providers tend to be from developed nations in Japan, Western Europe, and the United States.

Table 1 -- Global Wireless Growth Projections by Region

Source: Merrill Lynch.  The Next Generation IV: Wireless in the US.  March 10, 2000.

Figure 2

Source: CTIA.  http://www.wow-com.com/

Corporate Presence

• Table 2 shows the global leaders of the wireless service industry that consist of strictly wireless operations.

• Table 3 shows the US leaders in wireless service.

• In the US, the top three carriers account for 57% of subscribers.

Source: Standard & Poor's Market Insight
Telecommunications (Cellular/Wireless) Industry
http://umi.compustat.com/cgi-mi-auth/mihome.cgi?tab=industry

Table 3 -- Wireless Service Leaders in the US Market -- 1999

There are a considerable number of mergers and acquisitions within this industry.  Some are:

• MCI and WorldCom

• MCI/WorldCom and Sprint

• VoiceStream and Omnipoint

• VoiceStream and Omnipoint

• Vodafone and Airtouch Cellular

• Vodafone/Airtouch and GTE/Bell Atlantic

• Vodafone/Airtouch and Mannessmann

• According to Merrill Lynch, consolidation is widespread within the wireless service industry.

The end result of consolidation is that small firms are absorbed or driven out of business.  Large firms are better able to dictate terms to the industry.  However, at this time, there are enough firms to avoid any one firm to dominate the industry.  Intense price competition will keep competition in this industry for some time to come.

The case studies below illustrate the dynamics of this industry:

SprintPCS

AT&T Wireless

Vodafone

     
Back | Home | Next