Vodafone (VOD) mostly operates in the mature European markets. It holds a big stake in Verizon (VZ) Wireless. Today is announced competitive pressures, dropping prices and regulatory issues were hurting its financial margins. As the competition for a customer base that is no longer growing sets in, market share is likely to be picked up by cutting prices. Never a good sign.
Moving to the US, the market dynamics are in the process of becoming like those in Europe. Something like three-quarters of the people in the US have cell phones. Some portion of the population can’t afford them. And, some don’t want a phone that follows them everywhere incessantly ringing.
A good deal of the increases in the shares of AT&T (T) and Verizon (VZ) have come from their ability to replace falling land-line revenue with income from their cellular businesses. That time may be ending.
That leaves the big US phone companies with the challenge of taking back voice customers from the cable companies who took them in the first place and competing for TV and broadband consumers.
It was a nice run while it lasted.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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