Increased use of higher-priced smartphones has boosted revenue but pressured profit.
New York, NY (PRWEB) February 20, 2014
The Wireless Telecommunications Carriers industry has performed well over the past five years as wireless coverage has expanded and a greater number of Canadians have adopted smartphones and tablets, boosting demand for high-margin mobile broadband services. An increasing number of Canadian households have wireless telephone connections only; consequently, over this period, revenue is expected to expand at an annualized rate of 3.4% to $22.4 billion. Revenue is expected to grow an additional 3.8% in 2014 alone as carriers continue to expand the coverage of their fourth generation (4G), long-term evolution (LTE) networks and more consumers upgrade to LTE-ready smartphones.
According to IBISWorld Industry Analyst Sarah Kahn, “The industry is highly concentrated; however, that dynamic has slowly started to shift, following Industry Canada's 2008 auction of advanced wireless services (AWS) spectrum licences.” To stimulate competition, spectrum was set aside for new participants. Notable new industry participants that acquired spectrum in the auction include Wind, Mobilicity, Public Mobile and Quebecor. As a result of the auction, the number of industry operators has increased at an estimated annualized rate of 0.7% over the past five years.
“While these new players still only collectively account for a small portion of the market, they have pressured overall margins by offering attractive promotional offers to lure subscribers away from incumbent carriers,” says Kahn. The subsidizing of increasing smartphone activation has pressured profit; while an increasing use of smartphones aids carriers in the long run (smartphone users typically have bills twice those of voice-only subscribers), in the short term it translates into greater subsidies paid to make the devices more affordable to consumers.
Over the five years to 2019, revenue is forecast to grow; as 4G coverage increases, the number of mobile subscribers is forecast to increase as well. Some of the industry's smaller players are expected to increase their budding operations and become formidable opponents to industry incumbents in certain regions. However, other less successful companies will likely be acquired or exit the industry, heightening competition in a market-nearing saturation.
For more information, visit IBISWorld’s Wireless Telecommunications Carriers in Canada industry report page.
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IBISWorld industry Report Key Topics
The Wireless Telecommunications Carriers in Canada industry primarily provide wireless telecommunications services to mobile devices over switching and transmission facilities they own and operate. Operators that provide service through a combination of owned and leased facilities are also included in this industry. Industry operators primarily generate revenue through prepaid voice telephony services, postpaid voice telephony services, data services and equipment sales.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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