June 19, 2018
Verizon to grow wireless service revenues for first time in 4 years
Things are finally starting to look up for Verizon, at least according to some Wall Street analysts. Specifically, the analysts at Deutsche Bank Research forecast that in the second quarter the nation’s largest wireless network operator will record its first increase in wireless service revenues since 2014.
“Wireless fundamentals are meaningfully improving, following a heightened wave of aggressive competitive activity in recent years,” the Deutsche Bank analysts wrote in a research note issued this morning. “From a high level, industry pricing has stabilized, competitive intensity has moderated (churn is near all-time lows for VZ/T/TMUS), and the industry’s two biggest disruptors (TMUS/S) have announced plans to merge. We expect Verizon’s 2Q18 results to reflect a return to (normalized) service revenue growth (yoy), for the first time since late 2014, as well as continued margin improvement. These are all meaningful for Verizon, the industry’s largest player deriving nearly 90% of EBITDA from Wireless.”
mobilityView believes that pricing rationality will reappear in the USA marketplace. Clearly Telecom Analysts believe the same with the pending T-Mobile and Sprint merger.
A return to pricing rationality is a good thing for operators and their shareholders; and will provide operators the opportunity to make the very significant investments needed in 5G infrastructure (most expensive yet to deploy.)
We have seen unlimited Data Plans emerge in the USA 10 years ago around the launch of the first iPhone only to be rolled back due to the impact on the network. In Europe they had unlimited plans; but had to roll them back for the same reason.
Pricing rationality will return as a function of the market; and we believe that 5G related pricing will come at a significant premium to the current 4G/LTE pricing structures. 5G will create an opportunity to do a pricing reset globally; and we expect that a base 5G plan will be 2x to 3x the equivalent of that same 4G plan today.
Prices will increase and the need for a solution like mobilityView will only grow over time as data usage will grow geometrically with 5G in the same way we saw data explosion from dial-up to high speed internet. 5G will have the equivalent affect; and best in class dial-up was in North America $20 to $25 / month and today it’s $100 to $150 / monthBack