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Wireless industry is recession-resistant: Ovum

This year's first-quarter financial results for wireless industry participants reveals good news and bad news regarding the impact of the recession, according to market researcher Ovum.

Service provider revenues are down versus year over year, but only a few percentage points, while capital spending and attendant equipment vendor revenues are down 15"25 percent. Component makers and contract manufacturers are also reporting revenue declines averaging 20"30 percent versus the year-ago quarter.

"This year's first-quarter results show greater recession impact on suppliers than operators," said John Lively, vice president of forecasting at Ovum.

Two weeks into the quarter's earnings cycle, Ovum looked at results to date across a broad spectrum of industry participants to get a sense of how the recession is affecting the telecoms industry.

Specifically, the company looked at results for ten wireless carriers, seven equipment vendors, six component makers and two contract manufacturers.

The wireless carriers are all based in North America, whereas the revenues of the other companies represent global operations.

Wireless services are feeling the recession's impact, but not as bad as other segments.

Service provider revenues from wireless carriers in Ovum's sample grew just 3.4 percent in the first quarter, several percentage points lower than the pre-recession growth rates, which ranged from 9.4 percent to 11.8 percent.

North American results are heavily skewed by Sprint, whose revenues fell 12 percent. With Sprint's results removed, mobile revenues grew 8.7 percent, which is closer to Ovum's expectation for other regions and the global average growth in the quarter.

Service provider revenues from fixed operations declined 3.2 percent in the first quarter compared to the same time last year.

In comparison, pre-recession quarterly growth in 2007 ranged from -1.8 percent to +0.5 percent.

Level 3 posted the largest decline (10.3 percent) and Time Warner Cable the best showing, with revenue growth of 4.9 percent.

Time Warner's growth was driven by a 23 percent increase in voice revenues and an 11% increase in high-speed access subscriptions, highlighting consumers' growing acceptance of voice over IP and the stickiness of broadband services.

"Our conclusion is that both mobile and fixed service provider revenues are down a few percentage points compared to pre-recession rates," Mr. Lively said. "Given the double-digit declines seen in many other industries, we take this as good news.

"These results are also generally in line with our forecasts, which assume that telecoms services are somewhat recession resistant and the impact felt will be relatively mild compared to other industries," he said.