US cellcos on good form in fourth quarter
11 April 2006
North American mobile operators are on good form, following the reporting of fourth quarter 2005 financial results, says industry analyst Strategy Analytics.
According to a new report from the research firm, the margins for Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) among US cellular carriers jumped 4 percentage points in the final quarter of last year to reach 32 per cent, their highest fourth quarter level this decade.
Deutsche Telekom's US arm, T-Mobile USA, led the charge with margins jumping 7 percentage points during the quarter, while margins at Verizon Wireless increased 7 percentage points.
Despite the cost of supporting gross additions, which were also at a decade high, the North American wireless industry delivered a solid financial performance in the fourth quarter 2005. Although Average Revenue Per User (ARPU) continued its recent decline, operational expenditure (OPEX) tracked below this, fuelling Capital Expenditure (CAPEX) increases near the 30 per cent level, Strategy Analytics said.
"Verizon Wireless continues to stand out in the US market," said David Kerr, vice president, Global Wireless Practice, at Strategy Analytics. "Its customers do not generate spectacular ARPUs among the tier one carriers, but Verizon spends the least on acquiring and serving these customers by far.
"As a result, its market-leading average monthly EBITDA margins topped the $23 (£13) mark for the first time this decade."
Phil Kendall, director, Global Wireless Practice, at Strategy Analytics and author of the report, added: "We are seeing carriers break new ground in emerging markets, where the cost of serving customers continues to fall. While OPEX per user averages $40 per month in North America, it is already below the $5 level for carriers in China, Indonesia, Iraq, the Philippines, Russia, and the Ukraine."
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