Telecommunications Resellers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 1,600 telecommunications resellers in the US either sell local, long distance, or wireless phone services using other companies’ networks, or sell and install phone systems for businesses using third-party equipment. Local fixed line service resellers include competitive local exchange carriers (CLECs) who resell local phone services using the networks of incumbent local exchange carriers (ILECs). Equipment resellers resell products from equipment suppliers (Avaya, Cisco, etc.) and provide system integration services for small and medium businesses.

Transition To Internet Telephony

The telecommunications industry is in the midst of a transition from traditional fixed line circuit switching for voice traffic to packet switching of voice, data, and video over the Internet and wireless networks.

Dependence On Economy

Spending on telecommunications services is driven by business activity and demand for telecommunications resellers falls when the economy is weak.

Industry size & Structure

An average telecommunications reseller has about $11-12 million in annual revenue and 29-30 employees.

    • The US has about 1,600 telecommunications resellers who generate about $19 billion in revenue and employ 49,000 workers.
    • The industry is moderately concentrated - the top 50 companies account for 82% of industry revenue.
    • At the same time, there a large number of small companies - about 79% of telecommunications resellers have less than 10 employees.
                            Industry Forecast
                            Telecommunications Resellers Industry Growth
                            Source: Vertical IQ and Inforum

                            Coronavirus Update

                            Apr 29, 2022 - Hybrid Work Model Brings Opportunity
                            • Hybrid work is here to stay but many channel firms are not sure where to start taking advantage of the shfit, according to Telecom Reseller. Some industry experts suggest cloud-based Unified Communications as a Service (UCaaS) as a starting point because it enables resellers and their customers to get up and running fast, and without the need for large technology investments. A good way for sellers to achieve differentiation in UCASS, experts suggest, is by reselling platforms that offer flexible and open integrations so customized solutions can be built easily and rapidly. The demand for mobile UCaaS is also accelerating, which offers the opportunity to win market share.
                            • The pandemic could negatively affect demand for telecom services and equipment if small businesses cut back on investments, go out of business, or the rate of new business formations slows. More than two-thirds of small business owners in the US and Canada say they are worried that the Omicron variant will impact their ability to recover economically from the pandemic, according to the January 2022 Road to Recovery Report Alignable, a social media outlet for small business owners. Nearly 60% of respondents said the pandemic is having a negative impact on their business. About 70% of small business owners have yet to recover fully, and fewer than 35% report that their revenues are 90% or more than what they were before the pandemic. Inflation is the top concern for 30% of small businesses surveyed.
                            • Global smartphone shipments declined 3.2% year over year in the fourth quarter of 2021 but increased 5.7% for the full year, according to International Data Corporation (IDC). Supply chain challenges and components shortages slowed smartphone shipments in the second half of 2021, but sales were robust in the first half.
                            • A global semiconductor shortage affects the production of most types of electronic equipment, including telecom gear. Consumer buying patterns shifted at the onset of the pandemic and supply chains were disrupted. Carmakers cut back on production - and computer chip consumption - while home-bound consumers ramped up purchases of computers, game consoles, and other chip-containing electronics. The whipsaw in chip demand made the semiconductor shortage worse when auto production bounced back. Global semiconductor inventories saw a slight improvement in the fourth quarter of 2021, according to Gartner, but inventories remained below normal levels. Gartner expects chip inventories to normalize during the second quarter 0f 2022, but further restrictions or supply chain disruptions caused by Omicron could push the semiconductor supply recovery out to the fourth quarter.
                            • Supply chain disruptions also hindered the worldwide market for service provider routers and switches in the third quarter of 2021, according to a December 2021 report by telecom market data firm Dell’Oro Group. Supply chain disruptions affected telecom equipment vendors’ ability to deliver products but demand from telecom providers remained strong. Service providers are working to build out new network architectures in support of 5G. The North American market proved resilient despite the global downturn, as service provider router and switch revenue saw double-digit growth. The top-ranked vendors included Cisco, Huawei, Nokia, Juniper, and ZTE.
                            • Demand for broadband connectivity increased during the pandemic due to increasing telecommuting, video streaming, online gaming, and social media app use. Demand growth is boosting investments in 5G network infrastructure, according to Gartner. Global 5G infrastructure revenue was more than $13.7 billion in 2020, and the market is expected to have risen 39% in 2021 to a value of $19.1 billion. North American communications service providers (CSPs) are projected to have grown 5G revenue to $4.3 billion in 2021 compared to $2.9 billion in 2020. About 10% of CSPs offered commercialized 5G services in 2020, a; Gartner expects the percentage to climb to 60% by 2024.
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