Daily Management Review

US mobile communications market finished war for clients


The price war on the US mobile phone market stopped. After years of price reduction and shocking marketing offers, four of the country’s largest operator published results for the II quarter of 2016, indicating that prices have stabilized.

Mike Mozart
Mike Mozart
Current steady position is linked to the fact that telecommunication companies are faced with large investment and slowing income growth.

Sprint operator, once offered 50% discounts, said that maybe it's time to raise prices and abolish the system of discounts. Verizon Communications has already done it, while T-Mobile US Inc. raised prices a year ago, and now said that will continue to stick to this policy. Meanwhile, AT&T has not changed its tariffs for over a year.

Earlier this week, Sprint said that in the last quarter the company managed to attract more customers than expected, and that it’s finally going to raise prices after a long period of great discounts. The company’s CEO Marcelo Claure said that Sprint would have had to decrease prices and attract new customers until they managed to improve the network.

Verizon recently raised fares by $ 5 or $ 10 a month, and increased scope of services provided, to offset the users’ expenses. Last fall, T-Mobile has also increased prices for most of its tariffs. The company’s official representative did not call it a price increase, but rather a " provision of better quality connection for a higher fee". 

Craig Moffett of Research Institute MoffettNathanson noted that a year ago, prices fell by 5% and now this decline has slowed significantly. "Perhaps it even stopped. The market is gradually and slowly recovering, level of competition is the same, but now it seems more reasonable", - Moffett said.

Analysts also warn that the new iPhone, the presentation of which will take place this fall, would provoke another boom in offers from providers, since a new mobile phone is a good reason to use another company's services.

Earlier it was reported that Verizon Communications Inc., one of the largest US telecommunications operators, is going to acquire operational business of Internet company Yahoo! Inc. for 4.83 billion dollars, according to a joint release.

The transaction is subject to approval by regulatory authorities. It is expected to be closed in the first quarter of 2017, and does not include shares of Alibaba Group Holdings, owned by Yahoo!, its shares in Yahoo! Japan, convertible debt securities of Yahoo!, as well as Yahoo!’s number of specific investment and non-core patents.

After closing the deal, Yahoo! will be integrated with AOL company, a subsidiary of Verizon. The combined company will have a portfolio with more than 25 brands. Before that, Yahoo! will continue to work as an independent company.

"Yahoo!’s acquisition creates a highly competitive position for Verizon as a global mobile media company, and will also help speed up flow of revenues from digital advertising", - said Verizon’s CEO Lowell McAdam. 

source: wsj.com

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