External Factors
External Assessment
The cellular industry is a very competitive industry when it comes to market share. The industry has 4 major national players holding 90% of the market share. The chart below shows the US market share by carrier and how much ground the smaller carriers have to make up. The chart also shows an acquisition that was declined by the FCC, as it would have given AT&T 43.3% of the total wireless market share.(Dailywireless.org) The FCC heavily regulates any mergers in the cellular industry, as you can see with a few mergers we could easily get into a situation where the open market would be compromised and potential monopolies could form. Although the easiest way for carriers to gain large portions of the market share is through acquisitions, they can also do it by good old-fashioned customer growth. z Adding new customers, while retaining old customers is essential for wireless carriers. Net additions are a term that cellular providers will often discuss in their financials. Net additions= New Customer Additions- Customer churn (cancellations). In the wireless industry you must gain and retain customers to stay competitive. If you are good at one and not the other you will not be able to keep up with the fast pace industry. In the chart below you can see that Sprint who was one of the early innovators of mobility and data on their devices, is having trouble adding customers and certainly not retaining their current customers. To be a player in the wireless industry there are many factors that will help you gain market share, customer growth is just the start. When competitors are looking for a way to be competitive in the industry there are many factors that will contribute to a companies success. We have identified in a CPM matrix some current trends in the market for the top 2 competitors in the industry along with US Cellular have to focus on in order to achieve the ultimate customer growth, and market share. The CPM shows
The cellular industry is a very competitive industry when it comes to market share. The industry has 4 major national players holding 90% of the market share. The chart below shows the US market share by carrier and how much ground the smaller carriers have to make up. The chart also shows an acquisition that was declined by the FCC, as it would have given AT&T 43.3% of the total wireless market share.(Dailywireless.org) The FCC heavily regulates any mergers in the cellular industry, as you can see with a few mergers we could easily get into a situation where the open market would be compromised and potential monopolies could form. Although the easiest way for carriers to gain large portions of the market share is through acquisitions, they can also do it by good old-fashioned customer growth. z Adding new customers, while retaining old customers is essential for wireless carriers. Net additions are a term that cellular providers will often discuss in their financials. Net additions= New Customer Additions- Customer churn (cancellations). In the wireless industry you must gain and retain customers to stay competitive. If you are good at one and not the other you will not be able to keep up with the fast pace industry. In the chart below you can see that Sprint who was one of the early innovators of mobility and data on their devices, is having trouble adding customers and certainly not retaining their current customers. To be a player in the wireless industry there are many factors that will help you gain market share, customer growth is just the start. When competitors are looking for a way to be competitive in the industry there are many factors that will contribute to a companies success. We have identified in a CPM matrix some current trends in the market for the top 2 competitors in the industry along with US Cellular have to focus on in order to achieve the ultimate customer growth, and market share. The CPM shows
Bibliography: http://www.dailywireless.org/2012/03/23/u-s-cellular-goes-lte/ FCC 15th Annual Report and Analysis of Competitive Market Conditions With Respect to Mobile Wireless http://pages.stern.nyu.edu/~adamodar/New_Home_Page/data.html (EBITDA Multiples) http://arstechnica.com/business/2012/11/sprint-buys-chicago-st-louis-markets-from-us-cellular-in-spectrum-grab/