Industry Description
The wireless telecommunications carriers industry in the U.S comprises companies that maintain and operate infrastructure that enables wireless communication services (NAICS 51711). The industry provides voice, data, paging, and internet connectivity services.
The following are some basic characteristics of the wireless telecommunications carriers industry:
- Wireless telecommunications carriers industry has a combined revenue of $282.9 billion, with a growth rate of 3.2% in 2019-2024
- There are approximately 665 businesses as of 2019
- The wireless telecommunications carriers industry employs approximately 24,000 people
Industry Trends
The wireless telecommunications carriers industry is moderately fragmented and has medium levels of market share concentration, with the top four industry operators comprising approximately 67% of industry revenue in 2019. The largest players have numerous locations across the US, while small players are typically independently owned and operated in 1-2 states. Some key external factors that influence this industry are (i) 5G technology, (ii) increased phone use, and (iii) government regulations. Each of these is described in further detail below.
The rapid evolution of technology, specifically 5G technology, is a crucial factor to the industry. Covering 330 million Americans, the fifth-generation network technology provides several benefits, such as increased data rates, lower latency, and more connected devices. This technological revolution enables telemedicine, driverless cars, and smart cities. With a total of $705 billion in investments at the end of 2023, the industry is still pouring money into building 5G infrastructure because of the demand for bandwidth and reliable connections.
The increasing dependency on mobile phones is another factor impacting the industry. Mobile phone ownership among adults was at 98% in 2024, with 91% owning a smartphone. This has increased the demand for mobile data services and in response carriers are expanding their networks and becoming more aggressive with their data service offerings. Additionally, with the growth of employees working from home, there has been a greater demand for reliable wireless connectivity.
The industry is subject to regulations from the federal government such as security and privacy standards and policies. These standards and polices must be applied to wireless technologies because they act as countermeasures to tracking technologies. There are also state laws like the California Consumer Privacy Act (CCPA) regulating data privacy and applies to for-profit businesses doing business in California. These regulatory frameworks show the difficulties the industry faces with innovation.
The wireless telecommunications carriers industry in the U.S. has been influenced by external factors such a such as the adoption of 5G technology, the prevalence of phones, and the regulations by the government. The additional bandwidth brought about by new infrastructure investments enables new applications as 5G networks become more accessible. Increasing phone usage increases industry demand though regulatory pressure slows innovation, but the industry as a whole is sturdy.
Key Performance Metrics
In evaluating the wireless telecommunications carriers industry, the following metrics can provide useful information in comparing a subject company to guideline companies and transactions.
- Churn rate
- Network coverage
- Network latency
- Network speed
- Network uptime
- Subscriber growth
Industry Organizations & Publications
The following organizations publish useful information:
- Competitive Carriers Association (CCA)
- Cellular Telecommunications and Internet Association (CTIA)
- INCOMPAS
- United States Telecom Association (USTelecom)
Guideline Information: Private Purchase Transactions
Most wireless telecommunications carriers companies are privately owned. While there are publicly traded companies, data regarding the sale of 100% of closely held wireless telecommunications carriers companies is generally the best source of information to appraise a subject company.
The following are typical appraisal multiples from sale of wireless telecommunications carriers companies:
- Revenue multiples between 0.4 and 5.8 times
- Gross Profit multiples between 1.5 and 10.8 times
- EBITDA multiples between 4.9 and 30.9 times
In selecting guideline transactions, it is of critical importance to select transactions that are similar to the subject company. Unique factors for any subject company must be considered to yield credible results. Additionally, industry economic conditions also vary over time, which must also be considered.
Guideline Information: Publicly Traded Companies
Most wireless telecommunications carriers companies are privately owned; however, there are a few that are publicly traded, meaning it is possible to compare a subject company based on industry metrics and appraise using industry multiples. However, as with the guideline transactions described above, it is of critical importance to select publicly traded companies that are similar to the subject company. Also be aware that multiples of certain publicly traded companies may not accurately reflect a subject company.
The three largest publicly traded U.S. wireless telecommunications carriers companies ranked by market capitalization are:
- T-Mobile US, Inc. (TMUS) – $250.7 billion market capitalization
- Verizon Communications Inc. (VZ) – $164.9 billion market capitalization
- AT&T Inc. (T) – $161.7 billion market capitalization
The Price-to-Earnings (P/E) ratios of these three companies range between 16.9 times and 24.6 times.
Appraisal Rules of Thumb
Please note you should never use a Rule of Thumb in place of a professional appraisal. You will never see a competent professional appraiser do their work using a Rule of Thumb. The professional standards that govern professional appraisal practice, which all professional appraisers should follow, specifically prohibit the use of Rules of Thumb.
Wireless telecommunications carriers companies are businesses sold based on sound economics. These economic considerations can be measured using the key performance indicators described above, but such economics cannot be accurately summarized in these simple formulae.