A Rising Tide
By Carlo Longino, Thu Jul 29 22:00:00 GMT 2004

All ships are being lifted as industry-wide strength shows in second-quarter earnings.

Carriers and vendors alike thrived in the second quarter, as spending on all sides increased and growth was the norm:

Telefonica Moviles' sales and profit both rose 14 percent over 2003's second quarter, driven by higher sales in Latin America. Telefonica had 56 million subscribers at the end of the quarter, up about 20% from the same point in 2003.

Orange gave a boost to parent France Telecom's earnings, with first-half sales and income up significantly, on increased customer numbers and higher ARPU. Non-voice services now account for 14.3% of network revenues at the carrier.

Verizon Wireless' revenue and income were also helped by strong subscriber growth. For the fifth straight quarter, the carrier added more new users -- 1.53 million -- than its rivals, and revenue jumped 25% and earnings shot up 63%. ARPU also rose about 3 percent, and the carrier's controlling parent company said it might be willing to consider swapping some of its interest in Italian carrier Omnitel for part of Vodafone's stake in Verizon Wireless.

Siemens' wireless network equipment unit tripled its profits to 133 million euros, and although its handset business sold 28% more handsets than in the same quarter last year, its average selling price dropped as the company moved to defend itself from Nokia's price cuts and grab share from other vendors, leading to a loss of $50 million.

Alcatel, like its German counterpart, is benefiting from a global economic recovery that's spurring fixed and mobile carriers to pick up capital expenditure. The company's mobile unit increased its revenue slightly and quadrupled operating profit to 48 million euros.

These figures, along with earlier reports, show that consumers are spending both on new handsets, but also on mobile service, and carriers are watching sales and subscriber numbers rise. This trickles down to the equipment manufacturers as the carriers look to expand their networks, but also their service offerings in a bid to increase their ARPU, particularly the data element.

It's still a fragile circle, though, and a let-up in subscriber growth or existing customers tightening their spending on service, could dampen the industry's spirits.