USA: Operator Need for LTE Spectrum and Scale to Reshape Telecom Market through MandA

Summary The US telecom services market in 2012 generated revenue of US$389.5bn. Mobile data service was the main growth driver, producing $9.8bn more revenue in 2012 than in 2011. Adoption of 3G technologies has peaked at 65% of the mobile subscription base; we project this will decline starting in 2013 as a result of the expanding availability of LTE networks and devices. Key Findings At year-end 2012, the US was the largest telecom services market in the world, with revenue of US$389.5bn. Mobile data service was the main growth driver, generating $9.8bn more revenue in 2012 than in 2011. Smartphone adoption, machine-to-machine connections and 'data-sharing' pricing plans contributed to the growth in mobile data. We expect overall service revenue to grow at 1.5% CAGR during 2012-2017. The fixed/mobile revenue split will remain relatively stable: the ascent of mobile data is balanced in part by steady growth in pay-TV and broadband and by a decline in mobile voice revenue. The top two operators, ATandT and Verizon, accounted for 45% of overall service revenue in 2012. The mobile market landscape is changing rapidly due to a series of MandA events, driven largely by a growing need for spectrum and scale. The merger of MNOs T-Mobile and MetroPCS was approved in April 2013; Japan's Softbank and Dish Networks have separately bid to acquire Sprint, while both Sprint and Dish are trying to take control of Clearwire. Synopsis NA