NEW YORK-Carrier churn rates will likely increase during at least the next 12 months as subscriber contracts expire and users switch providers as a result of the implementation of wireless local number portability, according to a new report from Standard & Poor’s Ratings Services. S&P also expects carrier earnings before interest, taxes, depreciation and amortization margins to be adversely affected, as carriers increase marketing costs to retain and gain customers.
“Tempering some of the negative aspects of LNP is the opportunity for carriers to grow their subscriber base, since wireline-to-wireless number portability for the top 100 MSAs (metropolitan statistical areas) was also implemented on Nov. 24, 2003,” said Rosemarie Kalinowski, S&P’s credit analyst. “Furthermore, with an industry penetration rate of about 55 percent, there is still room for further subscriber growth.”
