NEW YORK-Competition from personal communications services companies in the United States is proving to be good news for wireless carriers and their stocks, David A. Freedman, managing director of Bear Stearns & Co. Inc., New York, said June 4.
“If you look at a graph of my stocks for the last three years, it’s been sideways or down due to fear of competition, but this is the first positive year in the group since we initiated coverage nearly four years ago,” Freedman said at a Bear Stearns’ press briefing titled “Technology 2000: Bringing the Future into Focus.”
By late this year or early next, the accumulated evidence is likely to show “that incremental penetration is accelerating and that the pricing level is not dropping dramatically,” he said. “Seventy percent of the PCS licenses (in the United States) are owned by major telecommunications companies, none of which are known to be price cutters.”
Starting next year, “we envision wireless data revenues helping to offset the decline in average revenue per subscriber for voice communications,” Freedman said.
The increasing use of mobile laptop computers and personal digital assistants stimulates demand for wireless networks. To capture this opportunity, however, carriers will have to deploy high-quality networks since computers are less capable than the human ear and brain of compensating for missing bits of information in communications.
American cellular carriers are favorites as prospective partners in consortia for building wireless networks in developing countries. Their improving financial performance will help them in this regard in two ways.
Domestic cellular carriers now are crossing over into a positive free cash flow status. Not only does this milestone free up internal capital for them to pursue overseas expansion but it also is likely to encourage more public capital market investors to participate in wireless plays, he said.
Among domestic cellular carriers, the biggest success story at the moment is 360
