“There is no infusion of new customers in the system,” Hans Vestberg, Verizon CEO, said on the firm’s fourth quarter 2022 earnings call. What he meant was that the U.S. mobile services market is essentially saturated. And that has direct implications for business strategy, as market share gains must come at the expense of other competitors.
Whether one looks at smartphone usage or subscriber numbers, the U.S. market has reached a point where virtually everybody who wants to use a cell phone already does so.
Of course, revenue is a different matter from subscriptions. It is possible to grow revenue per account.
Connectivity service provider revenue growth rates have been slowing globallyl. Growth rates of about 2.4 percent (subscribers) are predicted by Analysys Mason. IDC is a bit less optimistic, forecasting 1.9 percent growth over the next five years.
Looking only at fixed broadband and mobility services, Omdia predicts growth of up to 14 percent. Total revenues will grow at negative or slower rates, as voice, messaging and enterprise revenues contract in many markets.
Precedence Research thinks revenue growth could reach nearly five percent per year through 2030. Most of that growth, everyone expects, will come in developing regions which are adding subscribers.
It further means that revenue per account growth will come mostly from the ability to add new products that are purchased by existing customers. That can involve product bundles or shifting customers to higher-priced plans.
A saturated and competitive market also means decisions about how much promotional activity can be tolerated, which customer segments must not be chased and when to trade quantity for quality, in terms of accounts.
As Vestberg described it, looking at the postpaid segment of the market, “there are, of course, a certain amount of switchers in the market, and then there are a certain amount of people going from pre- to postpaid.” Tactically, that implies taking share of accounts when customers are switching providers and also moving prepaid customers to higher-priced postpaid plans.
Verizon is reliant on its mobile business for 85 percent of total earnings. All products in the fixed networks business represent just 15 percent of earnings.
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