February 25, 2010

Mobile Carriers to Grow from Existing Base

Due to consumer mobile penetration near saturation, soaring retention costs, consumer price sensitivity and surging data traffic demands, mobile carriers must look beyond market share to advance their growth and profitability, according to analysis in PricewaterhouseCoopers' new report: Change is in the Air: 2009 North American Wireless Industry Survey.

According to PwC, growth will be driven by making existing customers more profitable and less by finding new customers. Accompanying this report, PwC also released its Point of View: Wireless Customer Profitability.

"The U.S. mobile market is entering an era during which margins and profitability will trump penetration and volume,” said Pierre-Alain Sur, U.S. wireless industry leader, PricewaterhouseCoopers, in a statement. “Where customer experience had been the focus, the emphasis is now shifting to price, across range of customers - including premium users, value-oriented family plans, and the pre-pay market,"

According to the report, focusing on subscriber retention remains a critical issue due to escalating retention costs. Large carriers invested more than $160 per subscriber in their networks in the 2009 survey - a more than 30 percent leap over the 2008 survey.

Furthermore, U.S. wireless companies reported an increase in customer retention expenses of more than 50 percent in 2008 compared to 2007.

The survey finds that the downturn in the economy triggered an increase in consumers moving towards prepaid plans. On average, use of prepaid minutes increased more than 147 percent in the past four years, from 270 minutes in 2006 to 667 minutes in 2009.

Change is in the Air finds that smart phone sales are increasing and represent significantly higher average revenues per user (ARPU). As of June 30, 2009, 21 percent of all mobile device sales were smart phones, and an average of 12 percent of overall subscribers use smart phones. The average revenue per user for smart phones is $74 compared with total postpaid average revenue of $54.

Click here for the  full report.