global wireless telecommunications carriers

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WWW.IBISWORLD.COM Global Wireless Telecommunications Carriers June 2015 2

About This IndustryIndustry DefinitionCompanies in this industry operate and maintain switching and transmission facilities to provide directcommunications via wireless radio transmission. Wireless services include cellular voice telephonyservices, messaging services, broadband data services and mobile backhaul services (i.e. transferring datafrom small subnetworks to a network core). Carriers may also retail mobile handsets and related

equipment to consumers. The industry does not include mobile virtual network operators.

Main ActivitiesThe primary activities of this industry are: Providing mobile backhaul services Providing mobile data services Providing mobile messaging services Providing voice telephony services Retailing handsets and associated equipment

The major products and services in this industry are: Voice telephony Data services Equipment Messaging Other

Similar IndustriesC2523-GL - Global Computer Hardware Manufacturing Computer hardware manufacturers produce and assemble desktop and laptop computers, computerstorage devices, computer terminals and computer peripherals.

C2524-GL - Global Semiconductor & Electronic Parts Manufacturing This industry manufactures electronic components, typically packaged in a discrete form with two or moreconnecting leads or metallic pads.

I5112-GL - Global Wired Telecommunication Carriers This industry provides customers with voice telephony services using primarily wired infrastructure.

I5121-GL - Global Internet Service Providers This industry provides customers with wired internet access.


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Additional Resources

For additional information on this industry:

www.itu.int International Telecommunication Union

www.gsma.com GSMA

www.openmobilealliance.org Open Mobile Alliance

www.ctia.org CTIA the Wireless Association


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Industry PerformanceExecutive SummaryIn the past five years, wireless communications have become essential to the day-to-day lives of the world'sconsumers. As a result, demand for the industry has surged, with revenue increasing accordingly. Over thefive years to 2015, revenue is expected to grow an annualized 3.5% to $1.6 trillion. Industry operators haveadopted two primary strategies to grow revenue, expanding subscriber numbers and increasing average

revenue per user (ARPU).

The overwhelming majority of new wireless subscriptions over the past five years have emanated fromemerging markets. There are now over a billion mobile subscribers in China, while India is anticipated tosurpass that mark this year. The rapid increase in subscribers from these markets is expected to helpincrease global industry revenue 0.3% in 2015. In contrast, markets in developed economies have reachedsaturation, with penetration surpassing 121.0% in 2014, preventing wireless carriers in these markets fromachieving the subscriber growth rates of their counterparts in emerging economies. Instead, carriers indeveloped economies have focused heavily on expanding ARPU by providing more expensive mobile dataservices. Demand for these services has exploded over the past five years, as there has been widespreadproliferation of smartphones and tablets. The explosion of data traffic is expected to give industry revenuean additional boost.

Revenue growth is expected to slow slightly over the five years to 2020, with revenue forecast to grow 1.5%per year on average to $1.7 trillion. This growth will likely be driven by the ongoing rollout of fourth-generation networks, which provide the fastest data-transfer speeds available. Meanwhile, spectrumshortages in developed economies will continue to encourage consolidation while emerging markets nearsaturation over the next five years, enticing carriers to steer their efforts toward expanding ARPU. Thespectrum shortage is also expected to encourage the development of new small cells, Distributed AntennaSystems (DAS) and other network equipment to densify existing carrier networks. While the purchasingpower of consumers in emerging regions will not likely grow to rival that of consumers in developedeconomies, even a small increase in ARPU in these enormous markets would have a significant effect onthe industry.

Key External DriversThe key sensitivities affecting the performance of the Global Wireless Telecommunications Carriersindustry include:

GDP of the BRIC nations While subscriber growth rates in the developed world have been slowing, growth rates in many emergingeconomies have exploded. In particular, India and China represent markets with significant growthpotential for the industry. These countries represent a greater percentage of subscribers than theirproportion of global wireless revenue, indicating an opportunity for industry operators to expand revenue

by increasing the average revenue per user (ARPU) in these markets. As these countries' GDPs grow, sodoes the purchasing power of their consumers, driving adoption of higher-margin, value-added services.

GDP growth for these nations is expected to increase in 2015, representing an opportunity for the industry.Global consumer spending

As wireless telephony has cemented itself as consumers' preferred method of voice communication in mostmarkets, decreases in consumer spending do not significantly erode demand for industry services.However, consumer spending trends directly influence the extent to which consumers demand and adoptmore expensive, higher-margin wireless services. When consumer spending increases, industry operatorsare better able to market a range of value-added services that boost revenue and profit. Global consumerspending is expected to increase through 2015.


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Global population The size of the global population ultimately determines the size of the market in which industry companiesoperate. Although the number of subscriptions is not tied entirely to the size of the population (manypeople have more than one mobile subscription), a growing population, particularly in urban areas, stillincreases the number of potential wireless subscribers. The global population is expected to increase slowlyin 2015.

Global unemployment rate

High unemployment rates hamper per capita disposable income levels, leading to decreased demand formany of the industry's services. In particular, carriers that operate in Europe have suffered due to theregion's ongoing economic downturn. This region has a relatively high ARPU and share of industryrevenue compared with its share of the global population. Although the global unemployment rate isexpected to remain stagnant through 2015, Europe's economic troubles continue to pose a threat to theindustry.

Current PerformanceThe Global Wireless Telecommunications Carriers industry has grown rapidly over the past five years. Thenumber of wireless applications has increased considerably, making the cell phone an even moreimportant personal and business tool. This increasing utility has propelled demand for wireless services indeveloped economies, while growing disposable incomes and greater accessibility to wireless services, such

as voice and SMS, have boosted demand from emerging economies. Meanwhile, the price-eroding effectsof increased competition have facilitated growing demand for industry services in both markets. As aresult, industry revenue is expected to expand over the five years to 2015, growing 3.5% per year onaverage to $1.6 trillion.

Surging subscriptions in emerging markets Demand for wireless telecommunications services has surged in emerging economies over the past five

years. Consequently, the number of global mobile subscriptions has increased at an annualized rate of 7.7%over the past five years to 7.7 billion in 2015, based on data provided by the InternationalTelecommunication Union. This increase in subscriptions has led companies in this industry to hire more,causing employment to rise at an annualized rate of 1.4% to 2.3 million workers in 2015. Specifically, the

booming economies of China and India have proven key growth areas for the industry. China had over a

billion mobile subscribers in 2013 and India is expected to surpass the mark sometime this year;combined, the two countries are adding over 40.0 million subscribers every quarter, according to Ericsson,a worldwide provider of telecommunications equipment and services to mobile and fixed networkoperators. The addition of new subscribers in developing markets is expected to drive revenue up 0.3% in2015.

While subscriber growth in emerging markets has skyrocketed over the past five years, revenue from theseregions has not grown at nearly the same rate. For example, China and India represent 27.0% of globalsubscriptions, but only about 12.0% of industry revenue. This is because subscribers in these regionsprimarily subscribe to older legacy networks that do not provide the high-margin services that carriers inother regions have used to drive revenue growth. The low average revenue per user (ARPU) means thatthese markets still have enormous growth potential for wireless carriers moving forward.

Competition in developed markets Over the past five years, the defining characteristic of wireless telecommunications in the developed worldhas been the rapidly increasing demand for mobile data services, driven by the widespread proliferation of

broadband-enabled smartphones and tablets. These services have markedly increased ARPU andfacilitated a range of new mobile services and applications that would not have been possible before theimplementation of advanced third-generation (3G) and fourth-generation (4G) networks. These high-margin services enable carriers in these regions to achieve high APRU. Therefore, in contrast to markets inemerging economies, developed markets account for a disproportionately high share of revenue compared

with their share of subscribers. For example, even though the United States represents only 6.0% of global


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However, the rapid increase in data use that is forecast to propel industry growth in the next five years mayalso pose some problems for network operators. As the number of consumers using 3G and 4G servicesincreases, network bandwidth needs and, therefore, the need for substantial spectrum holdings, willskyrocket. Any shortfalls in capacity will likely cause consumers to experience degradation of servicequality. Network operators will have to invest significant resources in improving network capacity orimplementing alternate delivery mechanisms to reduce constraints placed on their wireless networks. In2014, the United States Federal Communications Commission voted to approve the accelerated

deployment of new wireless infrastructure. New small cells, Distributed Antenna Systems (DAS) and othernetwork equipment are expected to densify the networks of the carriers. Carriers operating in developedeconomies, which have saturated markets, are expected to focus the coming five years on networkdensification.


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Industry Life CycleThis industry is in the mature stage of its life cycle.

Life Cycle Stage Industry value added is growing at a slower rate than global GDP The industry is consolidating The number of mobile subscribers and average revenue per user (ARPU) continue to increase

In both developed and emerging markets, the Global Wireless Telecommunications Carriers industry is inthe mature phase of its lifecycle. Over the 10 years to 2020, industry value-added (IVA), which measuresthe industry's contribution to the global economy, is expected to grow at an annualized rate of 2.2%, asglobal GDP grows 5.2%. Although revenue is still growing in the developed world, growth rates aregradually contracting as markets approach saturation. In contrast, the industry is experiencing double-digit growth in emerging markets as subscriber numbers increase rapidly.

The industry is characterized by an extremely high rate of technological change and short technology lifecycles. Wireless communications technologies are constantly being improved and, with each improvement,new value-added services are introduced. Once these services become widespread, network constraintsusually necessitate the introduction of a new network technology, which will in turn spur the introductionof even more value-added services. This perpetual cycle has accelerated the rate of technological change inthe industry over the past 10 years.

The introduction of 3G network technology, for example, facilitated the provision of an array of mobiledata services such as mobile e-mail and multimedia messaging services. This, in turn, led carriers tointroduce upgraded 3G network technologies, such as the high-speed downlink packet access protocol,

which allow for faster data transmissions. Faster data transmissions have led to even more bandwidth-intensive mobile applications, such as streaming music and video-on-demand, which are the major drivers

behind carriers' ongoing rollout of 4G network technologies throughout most of the developed world.

Although the rate of subscriber growth in most developed countries has slowed, it continues to rise asmobility and constant connectivity become increasingly desired aspects of today's work and social

environment. In emerging economies, the level of wireless penetration is still relatively low, which isdriving large year-on-year gains in subscriber numbers and, therefore, revenue. As mobile penetrationlevels in the developing world increase, the next stage of growth for the industry will come from providingthese subscribers with value-added services with increased ARPU.


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Products & MarketsSupply ChainKey Buying Industries

I-GL - Global Telecommunications Telecommunications resellers are key customers of wireless companies. Resellers purchase wireless

network capacity at wholesale rates and then on-sell wireless services to consumers.

Z01 - Global Consumers The end users of wireless telecommunication services are businesses and consumers.

Key Selling Industries

C-GL - Global Manufacturing A number of manufacturing industries supply infrastructure, equipment and handsets for the provision ofwireless telecommunication services.

C2524-GL - Global Semiconductor & Electronic Parts Manufacturing This industry manufactures electronic components, which are typically packaged in a discrete form withtwo or more connecting leads or metallic pads.


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Products & Services

Data services 16.0%

Equipment 13.0%

Messaging 12.0%

Other 11.0%

Voice telephony 48.0%

Over the past five years, the industry has shifted away from its traditional product (i.e. voice telephony)toward high-margin data services. While this shift is much more prominent in the developed world, dataservices are expected to increasingly cement themselves as the industry's main product moving forward.Indeed, fourth-generation (4G) networks are IP-based networks, on which data is organized andtransmitted in packets, and will eventually make no distinction between voice and data transmission.

Voice telephony

Voice telephony services account for 48.0% of revenue. These services have declined as a percentage ofrevenue over the past five years as messaging services, data services and external competitors, such as

voice-over-internet-protocol (VoIP) providers, have decreased demand for traditional wireless voicetelephony services. Some operators have attempted to mitigate the threat of external competition bylaunching their own VoIP applications or partnering with VoIP providers and charging them a monthly fee.

Decreasing demand for this product segment is most evident in the developed world, with Japan and theUnited States leading in adoption of mobile data services. Notably, voice telephony is still the primaryproduct of industry operators in developing economies; however, these companies generate far lessrevenue than their counterparts in the developed world. Moving forward, this segment is expected tocontinue to decline in prominence as a greater portion of voice traffic will be transmitted as data overinternet-protocol-based 4G networks.

Other data services

Other data services (not including messaging) account for 16.0% of revenue. This product segment hasexpanded markedly as a percentage of revenue over the past five years as broadband-enabled smartphones

and tablets have proliferated through much of the developed world. In 2011, nonmessaging data servicesmade up the majority (53.0%) of overall global data revenue for the first time, according to Chetan SharmaConsulting.

Because smartphone users typically pay twice the amount of t voice-only subscribers, growth in dataservices translates into significant increases in industry revenue. However, smartphone users consume 35times more data than a typical phone user, according to Deloitte, which has placed significant capacityconstraints on operators' networks. Thus, the increasing prominence of this product segment has both

boosted revenue and spurred industry operators to invest heavily in implementing and expanding theirnetwork capacity and coverage. Moving forward, industry operators are expected to increasingly


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implement tiered data plans that charge users based on how much data they consumer in a given month;this pricing approach mitigates the adverse effect of a small proportion of users consuming the majority ofa network's bandwidth.

Messaging

Mobile messaging, often referred to as a text message or short message service (SMS), uses standardizedcommunications protocols to exchange short messages between mobile devices. While these services have

evolved considerably since their inception to include the transmission of images, video and audio content,they represent the original data service provided by the industry. These services are available to about78.0% of all mobile phone subscribers. In recent years, messaging-service growth has been pressured bythe increasing prominence of IP-based messaging applications that provide a similar service (e.g.

WhatsApp). Carriers have partially mitigated this threat through partnerships with existing applications or by launching their own IP messaging applications; nevertheless, due to external competition this producthas declined as a percentage of revenue over the past five years. Messaging services account for anestimated 12.0% of revenue.

Equipment

Equipment sales generate about 13.0% of revenue. The price of handsets in the developed world hasincreased dramatically over the past five years; however, many companies heavily subsidize the cost ofthese devices, moderating this product segment's increase as a percentage of revenue. Industry operatorsalso retail associated equipment such as femtocells, which are small, low-power cellular base stations that

boost cell signals and are designed for residential use.

Other

Other services account for 11.0% of revenue and include roaming and paging services and mobile backhaulservices. Growth in roaming revenue is largely dependent on the number of foreign travelers who require

wireless services while out of their home country. Backhaul services involve the transmission of signalsfrom an edge network to a core network and may be provided to other telecommunications carriers as ameans to lessen network congestion. Demand for these services has been driven by a historically highgrowth in mobile data traffic. As this trend continues, demand for these services is expected to increasemarkedly.


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Demand Determinants

Consumer demand for wireless services is influenced by population and household income growth. Thesize of the population determines the size of the industry's market, and per capita disposable income levelsdetermine consumers' ability to purchase wireless services.

New technologies, such as variations of third-generation (3G) and emerging fourth-generation (4G)networks, are generating additional data revenue in developed economies and increasing demand for theindustry. These technologies have facilitated new value-added services including the mobile e-mail, musicdownloads and mobile TV feeds. In the future, a plethora of new value-added services offered over 4Gnetworks will continue to drive demand for wireless services.

However, technological advancement and the mass adoption of new services can also siphon demand forthe industry's more traditional services. For example, the introduction of mobile messaging decreased thenumber of calls made. Similarly, e-mail applications are placing pressure on messaging, while theemergence of mobile voice-over-internet-protocol (VoIP) services (which are only feasible over upgraded3G and new 4G networks) has further undermined voice revenue. This competitive threat may becomemore pronounced as mobile VoIP becomes available in more markets. Nevertheless, the traditional mobile

voice market continues to drive demand for the industry in the developing world, as the majority ofconsumers in these regions cannot afford expensive smartphones.

Price is an important demand determinant for this industry as consumers are very price-sensitive,particularly in developing markets. Indeed, consumer adoption of new technologies is particularly sensitiveto price; if the price is too high, the new service will likely remain a niche product that does not gain massacceptance. However, once the price of a new service reaches an acceptable level, demand can explode.

Innovative packaging and marketing structures can stimulate demand. For example, bundling services (i.e.cross-selling) is a means through which integrated telecommunication companies can leverage theirsubscriber base and boost overall use. One key marketing promotion that continues to influence theindustry is the use of price caps, which give users a high dollar-value of calls for a set amount.

Major MarketsPrepaid subscribers 68.2%

Postpaid subscribers 31.8%

Prepaid subscribers


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Prepaid services typically attract price-sensitive consumers who will often switch services if a moreattractive option becomes available. As a result, prepaid services tend to dominate developing economies,

which are booming and driving the growth in global subscribers. Many consumers have multiple SIMcards, which enables them to alternate between different providers and take advantage of promotionalrates. European countries also have higher shares of prepaid subscribers relative to the global average.

Postpaid subscribers

Postpaid subscribers typically generate higher average revenue per user than prepaid subscribers. In manyinstances, the share of postpaid subscribers is higher in more developed economies. For example, theUnited States has a high share of postpaid subscribers, with the two leading wireless providers, AT&T and

Verizon, having in excess of 75.0% of their subscribers on postpaid plans. In recent years, however, prepaidsubscriber growth has outweighed postpaid subscriber growth, even in developed economies like theUnited States. This is primarily due to an increasing number of consumers preferring to avoid long-termcontracts.

International Trade

Exports in this industry are low and steady. Imports in this industry are low and steady.

The industry has no tangible level of international trade. Typically, providers service their own domesticmarket; however, service trade does occur in the form of international roaming when a wireless device isconnected to a third party's network in another country. The caller must ultimately pay to connect andterminate on another network. Most consumers and businesses use wireline telecommunications orservices offered over internet protocol networks to call overseas. Indeed, voice over internet protocol is atechnology that is rapidly increasing its share of the long-distance and international call market.


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Business Locations

Region %

North America 31.0

Africa & Middle East 19.0Europe 18.7

South America 10.9

North Asia 7.6

India & Central Asia 5.2

Oceania 5.0

South East Asia 2.6

Region %

North America 5.7

Africa & Middle East 16.5

Europe 13.3

South America 9.7

North Asia 26.8

India & Central Asia 18.3

Oceania 0.6

South East Asia 9.1


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According to the International Telecommunication Union (ITU), in 2014, developing economies areexpected to account for about 78.0% of mobile-cellular subscriptions, while developed economies accountfor a mere 22.0%. The number of mobile subscriptions worldwide is approaching the number of people on

Earth, with developed economies averaging 121 mobile subscriptions per 100 inhabitants and developingeconomies averaging 90 subscriptions per 100 inhabitants. The strongest mobile subscription growth iscurrently occurring in Africa and Asia and the Pacific, with penetration expected to reach 69.3% and89.2%, respectively.

Meanwhile, global average revenue per user (ARPU) rate has steadily declined, reflecting falling tariffprices as well as the popularity of multi-SIM in developed markets and that of lower income segments indeveloping economies. In North America and Europe, fierce competition has caused a reduction in prices.Nevertheless, growth in data consumption outweighed declines in revenue per subscriber, growing it

between 1.0% and 2.0%.

Europe Although Europe is the industry's largest geographic market, this region has decreased in prominence overthe past five years as regional subscriber growth has lagged that of other regions. Moreover, manyEuropean countries continue to be pressured by the ongoing European sovereign debt crisis. This has ledto decreasing ARPU (offset by increasing data usage) in this region and caused carriers that operateprimarily in this region (e.g. Vodafone) to lag behind the performance of the industry as a whole.Nevertheless, Europe's revenue share is still well above its share of population and subscribers. Thisindicates that wireless penetration and average monthly spending in this region are well above the globalaverage, reflecting European consumers' relatively high purchasing power compared to other regions.

North America North America is the region with the highest average revenue per subscriber, which primarily reflects themarket dominance of the United States. Indeed, although the United States represents only about 5.0% ofglobal mobile subscriptions, it represents about 30.0% of global wireless revenue. Carriers in the UnitedStates enjoy high ARPU due to US consumers' purchasing power and the widespread prominence of

broadband-enabled smartphones; indeed, smartphone sales in the United States currently represent morethan two-thirds of all handsets, compared with about one-fourth in the global market.

While the United States is the largest market in North America, Mexico is the fastest-growing. The UnitedStates is home to two of the largest wireless carriers (Verizon and AT&T), and Mexico is home to one of thefastest-growing global telecommunications carriers, America Movil. Nevertheless, North America's shareof revenue and subscribers has declined over the past five years as the mature region has struggled to keeppace with rapidly expanding markets in developing regions.

North Asia North Asia is a dominant force in the global wireless telecommunications market. This region is home tothe mobile technology leader, Japan, and the industry's largest market, China. Japanese mobile operatorsoffer an extensive range of data services that have made mobile telephony an integral part of many day-to-day activities; this, in turn, has boosted carriers' ARPU. Indeed, according to Chetan Sharma Consulting,60.0% of Japanese carriers' ARPU is generated through data services. Chinese mobile subscribers, incontrast, are highly price-sensitive, and many own more than one SIM card to take advantage of variouscall offers and packages. As a result, even though China accounts for the majority of all mobilesubscriptions, it accounts for less than 10.0% of industry revenue.


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South America The South America region represents an emerging market for the industry. In particular, the emergingeconomy of Brazil, the region's largest country, has presented opportunities for industry operators. Mobileinfrastructure has expanded more rapidly in Brazil compared with other countries in the region, as Brazilrapidly upgraded its infrastructure in preparation for the 2014 World Cup and continues to do so for the2016 Olympics.

India and Central Asia While the India and Central Asia region does not yet account for a significant portion of industry revenue,it has the second-largest share of mobile subscribers, making it a region with significant growth potentialfor the industry. According to the GSMA, India is the fourth largest smartphone market globally, trailingChina, the United States and Brazil. However, carriers in the country garner a dismal ARPU. As the Indianmarket matures and next-generation networks are rolled out, a minor increase in ARPU across such a vastsubscriber base could instantly transform the region into one of the industry's most prominent markets.


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Competitive LandscapeMarket Share ConcentrationIndustry concentration is low.

In contrast to domestic markets, which typically exhibit a high level of concentration, the Global WirelessTelecommunications Carriers industry has a low level of concentration. This can be attributed to large

players dominating a country or a geographic region, but not having a major global presence. Over the nextfive years, companies with extensive operations in the emerging markets of South America, India andChina are expected to significantly increase their market shares. These countries and regions arecharacterized by high wireless penetration, but low average revenue per user (ARPU). Consequently, as thepurchasing power of consumers in these regions grows and carriers offer more value-added services,particularly data services, ARPU and, thus, revenue and market share, are expected to grow. At the sametime, the competitive intensity in the industry, particularly in saturated markets in North America andEurope, will likely lead to increased consolidation among players over the next five years. As a result ofthese factors, market share concentration is expected to increase over the next five years.

Key Success FactorsThe key success factors in the Global Wireless Telecommunications Carriers industry are:

Economies of scale Economies of scale are critical to success in the high fixed-cost wireless business. Spreading a largedepreciation expense over a sizable subscriber base enables carriers to competitively price their servicesand win subscribers.

Ability to quickly adopt new technology There is a high rate of technological change in the industry. Operators must bring new products andservices to market quickly to differentiate their services.

Development of margin enhancing services

The traditional business of wireless telecommunications - voice telephony - is becoming a low-growth, low-margin service. Operators must bring to market new value-added services if they are to arrest margindecay and reduce subscriber churn.

Having links with key suppliers Industry operators must develop strategic alliances with key suppliers such as handset manufacturers,network equipment manufacturers and software developers. Doing so enables a carrier to be first tomarket with service-enhancing innovations.

Use an appropriate pricing policy The overwhelming majority of consumers are price sensitive. Therefore, it is important for carriers tocompetitively price service charges, plan limits and handsets if they are to grow subscriber numbers and

reduce churn.


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regulations and is at a different stage in its life cycle depending on the country or region in whichcompanies operate. For example, carriers in developed economies have much higher handset costs due to

widespread consumer demand for smartphones. These costs are even higher for carriers that offer handsetsubsidies as an incentive to lock customers into long-term, higher-revenue postpaid contracts. On theother hand, industry operators in developing markets face much lower handset costs and operate older,legacy networks, which decreases the amount of new equipment purchased.

Wages

Although the industry is capital intensive, companies still require a skilled labor force to install andmaintain equipment, design networks and operate services. Over the past five years, many carriers havelooked to improve operational efficiencies by reducing wage expenses. Indeed, there have been numerousmergers and acquisitions in developed markets to increase scale. Nevertheless, wages are expected tocontinue to increase over the next five years as companies hire more technicians amid ongoing fourth-generation (4G) network rollouts. However, revenue is expected to expand much more rapidly than wagesas more subscribers upgrade to higher-margin plans – a trend that boosts revenue but requires littleadditional maintenance or sales personnel. Consequently, wages as a percentage of revenue are expected tocontinue to decrease over the next five years. Wages account for an estimated 8.0% of revenue in 2015.

Depreciation

Depreciation charges incurred by mobile network operators are significant due to industry operators' highlevel of capital investment in base stations and costly spectrum licenses. Furthermore, given the high rateof technological change, continued investment in new services is necessary, which requires that assets becontinually depreciated. Depreciation as a percentage of revenue has increased over the past five years ascarriers have upgraded their networks to accommodate high-bandwidth applications. Moving forward,depreciation expenses are expected to decrease slightly as a percentage of revenue as carriers' initialinvestments in these 4G networks start to pay off, and as more consumers subscribe to high-marginservices and more devices are brought to market that are 4G-ready. Depreciation accounts for an estimated12.8% of revenue.

Additional expenses

Interest expenses are significant for wireless carriers because initial capital expenditures on networks andspectrum are often financed through debt. Other costs incurred by wireless operators include advertising,universal service obligations (where applicable), insurance and legal costs. Universal service obligationsare expenses that telecommunications operators pay in some countries to subsidize the provisioning oftelecommunications services in rural areas where it would otherwise be uneconomical for carriers toexpand service. Marketing expenses in the developed world have increased over the past five years as thesemature markets have approached saturation and companies have had to focus more heavily on attractingand retaining subscribers to maintain and grow economies of scale.


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Basis of CompetitionCompetition is high and increasing. Competition in the Global Wireless Telecommunications Carriers industry is based on price, service andproduct innovation. The development of a strong brand name and the geographic coverage of a mobilenetwork are also key areas of competition.

Internal competition Because it is often difficult to differentiate service offerings, price is a major point of industry competition.Indeed, most domestic markets are characterized by operators offering similar coverage and services. Priceincludes airtime charges, which vary according to the time of day and distance, and handset costs (whichare often subsidized). Operators engage in fierce price competition to remain appealing to price-sensitiveconsumers, especially in emerging economies.

Network coverage is another major area of competition within the industry. Networks will often claim tocover a certain proportion of the population; however, this should not be confused with geographiccoverage, as the majority of the population lives in urban and suburban areas. Many consumers who live inremote areas use satellite-based telecommunications services, which provide ubiquitous coverage. Thecosts of expanding network coverage to rural areas are often prohibitive for carriers, particularly those thatoperate in emerging and developing economies.

Product innovations are particularly important to maintain a competitive advantage in the industry. Thespeed of mobile technological advances combined with the trend towards convergence has made itnecessary to offer consumers the latest value-added features and network technology. The majority ofcarriers in the developed world are competing by aggressively implementing and expanding fourthgeneration (4G) networks that offer the fastest data transfer speeds currently available. Being able toquickly roll out new products is of paramount importance to maintaining a competitive advantage.

External competition Wireless telecommunications carriers also face high levels of external competition. In many markets,mobile carriers are competing against wired communication carriers; however, wired telecommunicationscarriers pose a limited threat to the industry. In developed economies, the wired market is suffering asconsumers disconnect from wired networks at a rapid rate; in less-developed economies, wired

telecommunications carriers are much less prevalent than their wireless counterparts. As 4G network coverage increases, wireless telecommunications carriers will face increased competitionfrom internet service providers and over-the-top (OTT) communications providers (i.e. services that use athird party's network to deliver services). Examples of OTT providers include video-streaming serviceNetflix and video-conferencing service Skype, both of which use third-party internet-protocol (IP)networks to provide their services.


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Barriers to EntryBarriers to entry are high and increasing.

Barriers to Entry checklist Level/Impact

Industry Competition HighIndustry Concentration LowLife Cycle Stage MatureCapital Intensity HighTechnology Change HighRegulation and Policy MediumIndustry Assistance None

SOURCE: IBISWORLD

Companies looking to enter the Global Wireless Telecommunications Carriers industry face a number of

significant barriers to entry. The most formidable of these barriers are the capital intensity of the industryand its regulatory backdrop. Industry operators allocate significant capital toward the building andupgrading of wireless networks. Gaining access to large amounts of capital is difficult, especially in thecurrent economic climate, and may preclude some companies from entering the industry.

The high rate of technological change in the industry increases its capital intensiveness. Generationaltechnology has a relatively short life cycle: second-generation technology is nearing the end of its life cyclein developed economies, reflected by the commoditization of voice services, and third-generation servicesare now offered by all the major carriers in developed markets. Moreover, operators are continuallyupgrading their networks to offer faster data speeds and differentiate themselves. Such upgrades requireongoing access to capital.

Another means by which wireless carriers attempt to achieve differentiation to reduce churn and drivesubscriber growth is through product bundling. This can only be offered by full-servicetelecommunications providers, which may either own the necessary infrastructure to provide such servicesor offer these services through resale partnerships. Pure wireless players will find it difficult to competeagainst full-service providers that are able to offer bundled product offerings at a discount (compared tosubscribing to each service separately). Finally, a number of regulatory requirements need to be satisfied

before a company can compete in the market, such as the need for a spectrum license, which entitlesoperators to provide mobile services within specified geographic areas over certain frequencies.


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Industry GlobalizationThe level of globalization is medium and increasing .

The level of globalization may vary in each region, because it measures the extent to which local carriersderive revenue from foreign sources and the share of regional industry revenue generated by foreign-owned wireless telecommunications carriers. Currently, the industry exhibits a moderate level ofglobalization, as major companies typically dominate their domestic country, instead of operating on atruly global scale. However, there is an increasing trend of cross-region mergers, which have led to anincrease in industry globalization.


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Major Companies

Major Player MarketShare

China Mobile Limited 7.5% (2015)

Verizon Communications Inc. 5.8% (2015)

Other 86.7% (2015)

China Mobile Limited

Market Share: 7.5%

China Mobile (CM) was incorporated in Hong Kong in 1997 and is now the largest mobiletelecommunications carrier in the world in terms of both revenue and subscribers. The company provides

wireless services in all 31 provinces, autonomous regions and directly-administered municipalities inMainland China, as well as in Hong Kong. As of September 2014, it has a customer base of 799.1 millionpeople. China Mobile Communications Corporation, a state-owned private holding company, has a 73.7%equity stake in China Mobile. China Mobile also owns China Mobile Pakistan, a Pakistanitelecommunications firm. The company's other subsidiaries include China Mobile Communication Ltd.,China Mobile Communication Co. Ltd. and Guangdong Mobile, among others.

In 2009, CM was awarded a license to implement a third-generation (3G) network using the TD-SCDMA(time division-synchronous code division multiple access) standard, an alternative to W-CDMA that the

company helped develop. The company undertook large-scale investment in the development of the TD-LTE network in 2013 and intends to use it primarily to carry high-bandwidth and high-quality wireless

broadband businesses. As of September 2014, the number of fourth-generation (4G) customers hadreached 40.9 million. Since CM uses a homegrown network technology, the firm has, until recently, beenunable to offer the array of devices that other carriers can offer, most notably the iPhone. In contrast, CM'sdomestic rivals, China Telecom and China Unicom, employ more compatible technologies and have helpedgrow their market share (largely at the expense of CM) by offering desirable handsets. However, Apple Inc.and China Mobile reached a deal in 2013, under which Apple began offering iPhones through the company.The first China Mobile iPhones were introduced in January 2014. As the world's largest wirelesstelecommunications carrier, CM's success with its TD-LTE network is expected to determine the futuresuccess of this brand of 4G technology.

Financial performance Over the five years to 2015, company revenue is expected to grow at an annualized rate of 10.6% to $120.4

billion. CM has benefitted from its enormous scale, as the company has the largest share of wirelesssubscribers in the largest market in the world. However, disappointing subscriber adoption of the firm's 3Gservices has pressured company growth. This disappointment can be attributed, at least in part, to thenetwork's technical problems and lack of desirable handset models. Moving forward, CM is expected tofocus on expanding its 4G network after having secured a deal to offer the 4G-compatible iPhone. Whilethis will benefit the company over the long term, it is expected to pressure profit growth over the shortterm.


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China Mobile Limited - financial performance

YearRevenue$ billion

Growth% change

Operating Profit$ billion

Growth% change

2010 72.7 N/C 22.6 N/C2011 83.1 14.3 23.8 5.32012 92.0 10.7 24.2 1.72013 101.7 10.5 21.9 -9.52014* 109.2 7.4 21.4 -2.32015* 120.4 10.3 21.4 -0.2

SOURCE: ANNUAL REPORTNOTE: *ESTIMATES

Verizon Communications Inc.

Market Share: 5.8%

US-based Verizon Wireless (VW) operates under the legal name of Cellco Partnership and was formed in2000 through a joint venture between Verizon Communications and Vodafone PLC. Until January 9,2009, VW comprised the merged operations of three US wireless carriers: Bell Atlantic Mobile, GTE

Wireless and AirTouch Cellular. In 2009, VW completed the purchase of Alltel, the fifth-largest cell phonecarrier in the United States, from a private equity consortium for $5.9 billion. The acquisition made VWthe largest wireless operator in the United States. Additionally, as of February 2014, Verizon acquired

Vodafone's 45.0% stake in Verizon Wireless and now has 100% ownership of the company.

VW offers voice and data services on a prepaid and postpaid basis, primarily using network technologyplatforms 4G LTE and 3G Code Division Multiple Access (CDMA). Verizon's CDMA evolution-dataoptimized (EV-DO) 3G-enabled network helps facilitate data services such as music downloads and videoon demand at speeds of up to 1.4 megabits-per-second (Mbps). The firm's 4G long-term-evolution (LTE)network was launched in late 2010 and covers 308 million people in the United States as of September2014. Wireless service offerings are numerous and include push-to-talk, short message services (SMS) andmultimedia messaging services (MMS), mobile web, and mobile TV.

In 2008, VW increased its spectrum holdings by 60.0% during a Federal Communications Commission(FCC) spectrum auction. This move was controversial because VW was already the largest carrier in theUnited States, and the acquisition further cemented the company's dominance. The FCC imposed openaccess restrictions on the newly acquired spectrum, which would allow mobile virtual network operators(MVNOs) to operate using the same spectrum. Similarly, in late 2011 VW entered into an agreement to

acquire spectrum licenses from cable operators Time Warner, Comcast, Bright House Networks and CoxCommunications. Under the terms of the $3.9 billion purchase, the companies would resell each other'sservices and Verizon would acquire the cable operators' unused advanced wireless services (AWS)spectrum. In January 2014, the company acquired EdgeCast Networks Inc., a powerful content deliverynetwork.

Financial performance

Over the five years to 2015, company revenue grew at an annualized rate of 7.9% to $92.9 billion. VW'sstrong performance has been driven by its aggressive expansion strategy and early adoption of 3G and 4G


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LTE infrastructure. Additionally, in early 2011, Verizon customers finally gained access to Apple's iPhone,stimulating growth in ARPU and reducing customer churn. Currently, about 75.0% of the firm's postpaidsubscriber base use smartphones. This has increased handset subsidies, particularly following the releaseof the iPhone 5, and pressured profit growth. An increase in retail postpaid connections combined with theincrease in penetration of 4G LTE smartphones and tablets supported revenue growth over this period.

Verizon Wireless - financial performance

YearRevenue$ billion

Growth% change

Operating Income$ billion

Growth% change

2010 63.4 N/C 18.7 N/C2011 70.2 10.7 18.5 -1.12012 75.9 8.1 21.8 17.82013 81.0 6.7 26.0 19.32014* 86.8 7.2 28.0 7.72015* 92.9 7.0 31.1 11.1

SOURCE: ANNUAL REPORT AND IBISWORLDNOTE: *ESTIMATES

Other Players Although domestic wireless telecommunications markets exhibit a high level of concentration, the Global Wireless Telecommunications Carriers industry has a low level of concentration. Nevertheless, the globalindustry has seen its own share of mergers and acquisitions as well. Other notable players not mentioned

below include Telefonica SA, NTT, Deutsche Telekom AG, America Movil and Orange SA.

AT&T Inc.

Estimated market share: 4.9%

US-based AT&T owns AT&T Mobility, an integrated telecommunications provider and the second-largest wireless telecommunications carrier in the United States. Over the past four years, AT&T Mobility hasinvested billions of dollars in enhancing and upgrading its GSM network infrastructure to facilitate high-speed downlink packet access (HSDPA), an advanced 3G network protocol. The firm has also beenaggressively expanding coverage of its 4G, long-term evolution (LTE) network. In January 2013, AT&Tacquired spectrum from Verizon Wireless and from Atlantic Tele-Network, allowing AT&T to deploy more4G LTE services. The company also invested heavily in the 2015 AWS-3 wireless spectrum auction and,according to AT&T, the company now covers 96.0% of the US population with high-value contiguous AWS-3 spectrum.

In the five years to 2015, AT&T's wireless revenue is expected to grow at an annualized rate of 5.9% to$77.9 billion. The increase in data use, propelled by the success of the iPhone, was a boon to AT&T in2008. It not only supported strong wireless revenue growth, but also delivered a considerableimprovement in the profitability of AT&T's wireless operations. In general, increasing subscribers andsubscriber data consumption has driven revenue growth.

SoftBank Corp.

Estimated market share: 3.5%


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Operating Conditions

Capital IntensityThe level of capital intensity is high. There is substantial investment required to attain sufficient geographic coverage to provide an

adequate service to subscribers Spectrum licenses, particularly for 3G services, have also proven to be capital intensive The automation of administrative functions, combined with scale economies, have led to a fall in wages

as a share of industry revenue

The Global Wireless Telecommunications Carriers industry is very capital intensive, reflecting the veryhigh level of capital resources tied up in wireless telecommunication networks and infrastructure. Capitalinvestment includes network infrastructure, land and spectrum. Mobile telecommunications carriers have

been heavily investing in expanding the capacity of their existing wireless networks or rolling out newnetworks to increase capacity and improve product and service offerings. Much of this investment has beenfocused upgrading 3G networks and rolling out 4G networks. Additionally, carriers have also investedsignificant sums in spectrum licenses. The capital intensity of the industry has increased over the past five

years as investment in network infrastructure and spectrum has increased while carriers have reducedlabor costs to improve efficiency.

Technology & SystemsThe level of technology change is high.

There is a high rate of technological change in the Wireless Telecommunications Carriers industry. The twodefining characteristics of this trait are short product life cycles and high investment in both research anddevelopment and technological infrastructure. Ultimately, the cost of providing various services using arange of infrastructures determines retail price points. Accordingly, a higher investment in technology,spectrum and infrastructure will increase service prices.

Switched off: 1G

The first generation of wireless technology was Advanced Mobile Phone System (AMPS), an analog systemthat was developed in the United States. This technology used different frequency carriers to createcommunications channels and only had voice functionality. Analog services were switched off in early2008.

Declining dominance: 2G

A widely used technology within the US wireless market is 2G. The defining characteristic is that it offerslimited data functionality as well as voice. Services for 2G and 2.5G are provided on two standards: GlobalSystem for Mobile Communications (GSM) and Code Division Multiple Access (CDMA).

GSM initially originated in Europe and is a second-generation cellular mobile radio technology thatsupports voice, data and text messaging, and allows roaming among different networks. AT&T and T-Mobile use GSM-based technology. CDMA is a wireless communications technology that uses the principleof spread spectrum communication. Under CDMA, communications channels are created by assigning aspecial coding scheme to information flows. Verizon and Sprint Nextel use CDMA network technology.Sprint Nextel also uses Integrated Digital Enhanced Network (iDen) developed by Motorola andSouthernLINC Wireless; however, this network will be completely phased out by 2013.


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The stepping-stone between 2G and 3G is 2.5G. The technology increases the functionality of 2G in that itoffers enhanced data services, such as Wireless Application Protocol (WAP). WAP offers mobile internetconnectivity, albeit at slow speeds. WAP technologies can be used on a variety of handheld digital wirelessdevices (e.g. cell phones, pagers, smartphones and two-way radios) and on a range of wireless networks,including CDMA and GSM. Due to inhibited data speeds, WAP services failed to take off on 2.5G networks.

General Packet Radio Service (GPRS) allows information to be sent and received across a GSM mobiletelephone network and supplements Short Message Service (SMS) technologies. Enhanced Data rates for

GSM Evolution (EDGE) is an update of GPRS technology used on the GSM network. By using EDGE,operators can handle three times more subscribers than GPRS; the technology triples operators' data rateper subscriber or can add extra capacity to their voice communications. EDGE, similarly to CDMA2000,offers slightly superior performance relative to GPRS but is not considered 3G technology. The AppleiPhone is GSM EDGE enabled, which is why an exclusivity agreement was reached between Apple and

AT&T, which made AT&T the only carrier for iPhones until February 2011. CDMA2000 is a bridgingtechnology that can be classified as both 2G and 3G.

Mobile internet: 3G

Technologies for 3G have assumed market dominance in the United States. SK Telecom in South Koreafirst offered 3G in October 2000. In the United States, all the major carriers offer 3G services; the appeal isthat it enables faster data transfers for users with 3G compatible devices. Such devices include cell phones,smartphones, tablets and laptops that use a 3G card. Services for 3G have increased the demand for new

value-added services, which can offer higher profit margins and new revenue streams for carriers. Such value-added services include internet browsing and downloading, mobile commerce, e-mail applicationsand mobile TV.

Wideband Code Division Multiple Access (W-CDMA) is a spread spectrum multiplexing technique, not astandard, which is owned by Qualcomm (owner of CDMA2000). W-CDMA was developed in 2001 by theJapanese mobile operator NTT DoCoMo, the largest wireless telecommunications carrier in the world.CDMA2000 1x EV-DO is a CDMA-based 3G technology that generally offers data transfer of between 300kbps and 600 kbps. It was first commercialized in 2002. Verizon uses this technology for its 3G services.

The term 3.5G simply refers to enhanced 3G services that do not reach the agreed parameters for servicesclassified as 4G. It typically refers to High Speed Downlink Packet Access (HSDPA), an advanced 3Gnetwork that offers downlink speeds of up to 14.4 Mbps and is compatible with the Universal MobileTelecommunication System, or UMTS. HSDPA is an advancement on W-CDMA and many major carriershave or are in the process of upgrading their network to this standard so that more data-intensiveapplications can be supported.

The future: 4G

Services for 4G support transmission speeds of up to 100 megabits per second (Mbps) for downlinks whena user is traveling at high speeds and 1 Gbps when traveling at low speeds. Such speeds will see completedevice and network convergence (i.e. any network will be able to deliver any service over any device).Services such as on-demand media will be available on a handheld device, mobile or laptop, using a 4Gdata card.

The important development in 4G technology is that the battle between two factions appears to be over.Ultra Mobile Broadband, the proposed 4G successor to CDMA2000, has been scrapped, with Qualcommannouncing it was ending development of the technology and favoring LTE instead. Carriers will now allsupport the GSM/UMTS faction's Third Generation Partnership Project (3GPP), known as UniversalTerrestrial Radio Access Network Long-Term Evolution (LTE). LTE will allow coexistence with a range ofprevious standards, allowing handoffs between cells supporting LTE and cells supporting UMTS,GSM/GPRS, and other systems.


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NTT DoCoMo is the major proponent of 4G technology. In the United States, Verizon outlined its plan tointroduce LTE 4G services in 2010, with a full service rollout to be achieved by the end of 2013. Meanwhile,Sprint Nextel has already begun its 4G rollout using WiMax standardized technology. WiMax is a standardthat allows mobile broadband and has greater geographic coverage from Wi-Fi.

Wi-Fi and WiMax

Wi-Fi and WiMax are not technologies, but are standards. In order to carry these names, technologies

must have met a strict set of rules and interoperability tests for the standards governed by the Institute ofElectrical and Electronic Engineers. These standards allow wireless internet access for a broad range ofproducts that include laptops, PDAs and cells.

Super 3G wireless infrastructure has facilitated a significant improvement in wireless data, with flow oneffects in services, use and revenue. Indeed, data revenue is presently one of the industry's major growthdrivers. However, the price and efficiency of data streaming to customers over super 3G infrastructures arenot as cost competitive as the delivery of data services over Wi-Fi or WiMax standard technology. Building3G cell sites (i.e. base stations) is much more expensive than establishing Wi-Fi or WiMax infrastructure,

with about 75.0% of the expense associated with land, construction and maintenance. And this will be thesame for LTE 4G.

Wi-Fi relies on proximity, which makes national blanket coverage nearly impossible. But because of its lowcapital and operating costs, Wi-Fi hotspots are commonplace in locations where wireless access adds value(e.g. airports, cafes and libraries). However, WiMax provides service to an area between three and 10kilometers without needing a completely unobstructed path between the user and the network antenna, as

well as with superior capacity and speed when compared with the Wi-Fi standard. This is why WiMax has been touted as a future technology for years.

But, WiMax has struggled to gain traction in the wireless space because of the dominance of GSM andCDMA technology. However, a large number of heavy hitters in the media, communications and ITindustries are investing significant sums of money in WiMax. In the United States, Sprint Nextel is stakingits future on the technology standard through its 51.1% ownership of the WiMax company Clearwire.Meanwhile, other investors in Clearwire include companies, such as Intel (13.2%), Comcast (8.5%), Time

Warner Cable (4.5%) and Google (4.1%). Importantly, WiMax is available to millions of businesses andconsumers now, while 4G LTE is yet to arrive.

Femtocells

In 2010, wireless carriers began showing interest in commercial offerings of femtocells. Femtocells, a small version of a cellular base station, allow customers to increase cellular coverage wherever broadbandinternet connections are available. The technology operates in a similar manner to Wi-Fi routers, enablingtwo to eight cellular connections per femtocell. AT&T began offering its AT&T 3G Microcell femtocell tocustomers in September 2010.

For large carriers with persistent network integrity issues, particularly AT&T (which was unprepared forthe data-intensive iPhone), femtocells improve coverage and service without significant infrastructureoutlays. However, in the future, femtocells could be deployed by some companies to undercut the servicesof major wireless carriers. MagicJack, a provider of low-cost Voice over Internet Protocol (VoIP) service,announced in January 2010 that it intends to offer a low-cost GSM femtocell, enabling users to place VoIPcalls over GSM wireless, a service the major carriers have been reluctant to allow.

Enhanced Specialized Mobile Radio Services is a digital service and applies digital systems to traditionaldispatch specialized mobile radio in the 800 and 900 MHz bands. Aggregating this spectrum and applyinga cellular-like digital network can provide cellular or PCS-like voice and data messaging services.


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Revenue VolatilityIndustry revenue volatility is low.

The Global Wireless Telecommunications Carriers industry exhibits a low level of revenue volatility. Although the number of global mobile subscriptions has increased markedly over the past five years, thisincrease has not contributed to increased revenue volatility. Wireless carriers have high fixed-cost businessmodels and, as such, large gains in business volume have facilitated price declines. Moreover, intensifyingcompetition in many regions has magnified price cutting. This has served to partially offset revenue jumpsdue to large subscriber gains, ensuring that volatility was limited. Over the next five years, IBISWorldexpects revenue volatility to increase slightly as many existing subscribers upgrade to higher-margin dataservices. However, as industry participants face heightened competition and markets in developedcountries reach saturation, year-on-year revenue volatility will likely be moderate.

Regulation & PolicyThe level of regulation is medium and the trend is increasing .

Regulation in the Global Wireless Telecommunications Carriers industry is dependent on regulationsimposed by the government of the country in which companies operate. In most developed countries, thereis a telecommunications regulator that enforces some sort of telecommunications act, allocates spectrumlicenses and monitors the level of domestic competition to ensure that consumers receive fair prices. Anational regulator may also impose technical obligations on the operation of a network; regulate theinterconnection of a network with the networks of other carriers; regulate termination charges; requirecarriers to adhere to number portability; and impose minimum service standards.

A government often appoints a regulator or association to allocate licenses to operate in a particularcountry, region or state. Each regulation and association only has jurisdiction in their own country and assuch, carriers are required to apply for licenses to another regulator should they seek to operate services inanother country. Licenses are only granted to companies that are registered in that particular market. Assuch, foreign companies that operate abroad will typically establish a subsidiary to hold and operate such alicense.

Spectrum licenses are necessary if a company is to operate as a wireless telecommunication provider in aparticular domestic market. The allocation of spectrum in a particular band is finite and is considered asubstantial barrier to entry, which often limits the number of national players in any given domesticmarket. Different bands fit different standards, which means carriers must hold licenses for each of thedifferent services they offer (e.g. a different license for 2G and 3G services independently). Licenses areonly held by a carrier for a specific period, usually ten years, so carriers must periodically renew theirlicenses or seek new licenses where appropriate. Mobile resellers can provide wireless services withoutholding spectrum licenses; however, these companies are excluded from this industry report because theydo not operate their own switched infrastructure.

Foreign ownership restrictions on spectrum licenses are imposed by some regulators. For example, theFederal Communications Commission (FCC) in the United States may limit non-US citizens or their

representatives from holding more than 20.0% of the capital stock of an FCC licensee. In Thailand and Vietnam, no foreign provider can own more than 50.0% of the equity in any telecommunications company.In India, this level is 49.0%.

International roaming reflects calls made by foreigners on a network other than their domestic provider.Such calls are possible because wireless telecommunications carriers have wholesale roaming agreementsin place whereby access tariffs are charged for network access. In essence, such arrangements allow aseamless transition of services. While the market determines the price of these services in most instances, aregulator may intervene by setting prices or fining a carrier when charges are deemed excessive.


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Industry AssistanceThe level of industry assistance is none and the trend of industry assistance is steady.

There are no specific tariffs for this industry.

In most countries where market systems are in place, the industry receives no direct level of governmentassistance. Nevertheless, the industry has many international and domestic association working to supportit in many countries. The International Telecommunication Union is the United Nations specialized agencyfor information and communication technologies, developing the technical standards that ensure networksand technologies seamlessly interconnect while striving to improve information and communicationtechnologies to underserved communities. GSMA represents the interests of mobile operators worldwideand organizes industry events, such as the Mobile World Congress and Mobile Asia Expo. Open Mobile

Alliance delivers open specifications for creating interoperable services that work across all geographical boundaries, on any bearer network. CTIA the Wireless Association is an international nonprofitorganization that represents the wireless communications industry, advocating on behalf of members atgovernment levels, coordinating efforts to provide greater service for customers and supporting industryinitiatives.


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Key Statistics

Industry Data

Revenue($b)

IVA($b)

Establish-ments

(Thousands) Enterprises(Thousands)

Employ-ment

(Thousands) Exports

($b) Imports

($b) Wages

($b)

MobileSubscribers

(Million)

2006 1,047.7 427.7 1,178 941 1,958 - - 123.3 2,7452007 1,132.3 452.7 1,186 915 2,023 - - 123.8 3,3682008 1,228.8 481.4 1,164 885 2,073 - - 124.4 4,0302009 1,290.6 499.7 1,132 862 2,113 - - 124.8 4,6402010 1,343.1 514.7 1,113 845 2,160 - - 124.5 5,3172011 1,369.9 522.0 1,086 816 2,224 - - 124.0 5,9572012 1,466.7 549.9 1,069 804 2,205 - - 123.8 6,1562013 1,538.4 570.1 1,049 790 2,190 - - 123.2 7,0522014 1,591.2 590.1 1,062 781 2,253 - - 127.9 7,3972015 1,596.7 592.1 1,077 773 2,321 - - 128.3 7,7122016 1,625.0 603.3 1,087 766 2,370 - - 131.2 7,986

2017 1,646.5 611.7 1,093 757 2,409 - - 133.4 8,2502018 1,661.2 617.9 1,100 749 2,444 - - 135.3 8,4532019 1,695.2 630.9 1,111 739 2,495 - - 138.4 8,6642020 1,719.3 640.4 1,119 730 2,538 - - 140.9 8,855

Annual Change

Revenue(%)

IVA(%)

Establish-ments

(%) Enterprises

(%)

Employ-ment(%)

Exports(%)

Imports(%)

Wages(%)

MobileSubscribers

(%)

2007 8.1 5.9 0.7 -2.8 3.3 N/C N/C 0.4 22.72008 8.5 6.3 -1.9 -3.3 2.5 N/C N/C 0.5 19.72009 5.0 3.8 -2.7 -2.6 1.9 N/C N/C 0.3 15.12010 4.1 3.0 -1.7 -2.0 2.2 N/C N/C -0.2 14.62011 2.0 1.4 -2.4 -3.4 3.0 N/C N/C -0.4 12.02012 7.1 5.3 -1.6 -1.5 -0.9 N/C N/C -0.2 3.32013 4.9 3.7 -1.9 -1.7 -0.7 N/C N/C -0.5 14.62014 3.4 3.5 1.2 -1.1 2.9 N/C N/C 3.8 4.92015 0.3 0.3 1.4 -1.0 3.0 N/C N/C 0.3 4.32016 1.8 1.9 0.9 -0.9 2.1 N/C N/C 2.3 3.52017 1.3 1.4 0.6 -1.2 1.6 N/C N/C 1.7 3.32018 0.9 1.0 0.6 -1.1 1.5 N/C N/C 1.4 2.52019 2.0 2.1 1.0 -1.3 2.1 N/C N/C 2.3 2.52020 1.4 1.5 0.7 -1.2 1.7 N/C N/C 1.8 2.2


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Key Ratios

IVA/revenue(%)

Imports/demand

(%)

Exports/revenue

(%)

Revenue peremployee

($'000)

Wages/revenue

(%) Employees

per est.

Averagewage

($)

2006 40.8 0.0 N/C 535.1 11.8 2 62,972.42007 40.0 0.0 N/C 559.7 10.9 2 61,196.22008 39.2 0.0 N/C 592.8 10.1 2 60,009.62009 38.7 0.0 N/C 610.8 9.7 2 59,062.92010 38.3 0.0 N/C 621.8 9.3 2 57,638.92011 38.1 0.0 N/C 616.0 9.1 2 55,755.42012 37.5 0.0 N/C 665.2 8.4 2 56,145.12013 37.1 0.0 N/C 702.5 8.0 2 56,255.72014 37.1 0.0 N/C 706.3 8.0 2 56,768.82015 37.1 0.0 N/C 687.9 8.0 2 55,277.92016 37.1 0.0 N/C 685.7 8.1 2 55,358.6

2017 37.2 0.0 N/C 683.5 8.1 2 55,375.72018 37.2 0.0 N/C 679.7 8.1 2 55,360.12019 37.2 0.0 N/C 679.4 8.2 2 55,470.92020 37.2 0.0 N/C 677.4 8.2 2 55,516.2

Figures are inflation-adjusted 2015 dollarsNOTE: UNLESS SPECIFIED, AN ASTERISK (*) ASSOCIATED WITH

A NUMBER IN A TABLE INDICATES AN IBISWORLD ESTIMATE ANDREFERENCES TO DOLLARS ARE TO US DOLLARS.

Jargon

AVERAGE REVENUE PER USER (ARPU) A key performance indicator that indicates whether revenue isdue to increased customers or phone usage. ARPU equals revenue divided by the number of subscribers.

CHURN RATE Refers to the proportion of subscribers that discontinue service during a given time period(e.g. quarterly or annually). Customer churn measures a company's success in retaining customers.

M-COMMERCE A transaction that is initiated or completed using a mobile electronic device.

POSTPAID A contract-based cell phone service that is paid for after use. Subscribers receive a bill that is based on their use of cell phone services for the month.

PREPAID A cell phone service that is purchased prior to use. The subscriber purchases credit to use on acell phone network and in doing so, avoids ongoing billing.


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Disclaimer

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