Verizon Wireless ranked at the top of a dozen North American mobile operators in a survey that examined value metrics such as subscriber growth, average revenue per user, churn and subscriber acquisition costs. Meanwhile, Cingular Wireless L.L.C. accounted for more than a third of industry capital expenditures in the fourth quarter.
“Nobody can touch Verizon Wireless,” concluded Jeffrey Hines, president of N. Moore Capital Ltd., in his North American Wireless Services Update for the fourth quarter of 2005.
The survey examined a dozen cellular operators in the U.S. and Canada. The U.S. carriers included Alltel Corp., Cingular, Dobson Communications Corp., Sprint Nextel Corp., T-Mobile USA Inc., SunCom Wireless Holdings Inc. (formerly Triton PCS Holdings Inc.), Ubiquitel Inc., U.S. Cellular Corp. and Verizon Wireless. Those nine carriers represent more than 90 percent of the American subscriber base, Hines estimated. The three Canadian carriers-Bell Mobility, Rogers Wireless and Telus Mobility-account for more than 95 percent of the Canadian subscriber base.
According to the survey, the wireless industry saw major improvements in nearly every possible metric in the fourth quarter. Service revenue was up 13.7 percent to $32 billion, compared to $28.2 billion in the same quarter last year. Earnings before interest, taxes, depreciation and amortization rocketed up more than 30 percent year-over-year, while EBITDA margins rose to 35.1 percent in the quarter, vs. 30.5 percent in the same quarter in 2004.
Total North American subscribers jumped 15.1 percent to 204.8 million. U.S carriers added more than 7 million net subscribers in the quarter, compared to about 6 million in the same quarter of the prior year. Meanwhile, carriers spent less to acquire those customers, with cost per gross addition dropping more than 14 percent $344 in a quarterly comparison.
Carriers stepped up capital expenditures to the tune of $8.1 billion during the final three months of last year, an increase of nearly 24 percent from the same period in 2004. Hines noted that it was the highest year-over-year increase in the past six quarters, and that 37 percent came from Cingular, “in what can probably only be described as `catch-up mode,”‘ Hines said. He added that Cingular’s spending focused mainly on integrating the old AT&T Wireless Services Inc. network and adding network capacity.
The single blemish amid those stellar statistics was ARPU, which slid 1.8 percent to $53.25 in the fourth quarter, down slightly from $54.24 posted during the fourth quarter of 2004. Hines noted, however, that ARPU “has really been pretty steady” over the past few years, as wireless per-minute prices have fallen, but customers now talk longer each month.
Considering those metrics, Verizon Wireless came out on top, with Canadian operator Telus Mobility in second overall.
