Stagnating investment in business infrastructure following the recession hurt revenue
New York, NY (PRWEB) December 20, 2013
The Wireless Tower Construction industry sharply contracted over the past five years as business infrastructure investments stagnated following the recession. Despite strong demand for mobile data and high-speed connections, the downstream telecommunications sector relied on older existing technology to reduce costs. High-speed long-term evolution (LTE) mobile services and fiber-optics networks were rolled out very slowly. As a result, revenue fell as much as 26.2% in 2009 and continued to decline in each of the past five years. According to IBISWorld Industry Analyst David Yang, “In 2013, industry revenue is anticipated to fall another 14.6% due to uncertainty caused by the federal government budget and debt ceiling.” Rising energy costs are also expected to slightly hamper energy-intensive construction projects. Overall, IBISWorld anticipates industry revenue to fall at an annualized rate of 11.9% to $4.8 billion in the five years to 2013.
Industry profitability has declined due to high internal competition and low telecommunication infrastructure investments. Contracts are often open to competitive bidding, and industry operators lowered rates to win contracts following the recession. At the same time, industry operators had to retain skilled workers and engineers. As such, wages' share of revenue is anticipated to increase from 25.3% in 2008 to 38.4% in 2013. Historically, wage costs have accounted for about 28% to 35% of revenue. As a result of high competition and rising wage costs, profit is anticipated to fall from 9.6% of revenue in 2008 to 6.1% in 2013. Furthermore, falling revenue and profitability has forced the industry to steadily consolidate. During the period, the number of industry establishments is anticipated to fall at an annualized rate of 3.8% to 2,218.
Demand for telecommunication infrastructure construction is anticipated to steadily grow over the five years to 2018. Over the period, private nonresidential construction investments are forecast to increase. Local and state government investment, which includes funding for telecommunications projects, is also anticipated to slowly recover. “Additionally, telecommunications service providers are expected to steadily expand their high-speed data services, while the existing infrastructure will require considerable maintenance and repairs,” says Yang. As such, IBISWorld forecasts that industry revenue will grow in the five years to 2018.
For more information, visit IBISWorld’s Wireless Tower Construction in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in the Wireless Tower Construction industry primarily engage in the construction of wireless communication structures, including transmission lines, towers, cables and other utility structures. The work performed may include new work, reconstruction, rehabilitation, and repairs. Industry enterprises include specialty contractors primarily engaged in activities related to the construction of communication lines and related structures.
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