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Landline Losses Becoming Less of a Burden on Telco Revenues

Thanks largely to mobile devices over the last decade, the nation’s traditional phone companies have lost millions of access lines.

Moody’s Investors Service thinks the impacts of those losses on revenue growth will get smaller. The credit ratings agency forecasts that voice revenues will dip below 30 percent of total wireline revenues in 2014, down from an estimated 44 percent two years ago.

Access lines fell 8 percent last year, Moody’s data shows.

“As revenue from voice services becomes a smaller part of overall revenue, its drag on revenue growth will get easier for carriers to overcome  either by modest growth in data and TV revenue, or by cutting costs,” said Moody’s in a report on the U.S. fixed-line telecom industry.

AT&T, Verizon Communications and Windstream are less reliant on voice services for revenues than some other carriers, including CenturyLink, FairPoint Communications and Frontier Communications, according to the credit ratings agency. AT&T, Verizon and Windstream generate 35-38 percent of landline revenues from voice services while Frontier and FairPoint obtain 45 percent of revenues from voice, according to Moody’s. Moody’s estimates CenturyLink fetches 40 percent of its landline revenues from voice services.

Moody’s doesn’t have high expectations for the domestic landline telecom market. It anticipates flat revenues in 2012 and 2013 compared to 2011.

One of the contributing factors: competition in the business market from cable companies, although Moody’s noted AT&T, CenturyLink and Verizon are less vulnerable to such competition than other carriers. Those more exposed companies include Frontier, FairPoint and Hawaiian Telcom Communications as well as competitive carriers, it said. Excluding wholesale services, revenue from business services accounts for 40 percent of all industry revenues, according to Moody’s.


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