Ivan Seidenberg and Dan Hesse, the chiefs of Verizon and Sprint respectively, say that companies in their industry should be able to weather the current economic recession, according to a report at CNET. They told the audience at the Dow Jones/Nielsen Media & Money Conference there would be some impact but nothing significant. Seidenberg said Verizon, 60% owner of Verizon Wireless, has not seen any significant decline in subscriptions or revenue.
Verizon and the world’s other traditional telcos have, of course, suffered a seemingly permanent decline in their residential phone subscribers. That has been more than offset by their growth in mobile phone subscriptions, except for BT, and their booming broadband business.
Seidenberg said Verizon is in two core businesses in which consumers will continue to spend money even if their financial situation worsens – mobile phones and broadband. There could be some slowdown in the rate of growth, he said, especially in the hyper growth that has recently existed for data on mobile devices.
“Consumers may pull back and not buy as many premium services,” he said. “But the question is will they pull back their spending on what we sell? Our view is that we will weather this. We sell the most indispensable device that consumers have, the mobile phone.”
Verizon Wireless added 1.5 million subscribers in the second quarter ending June 30, bringing its total to 68.7 million but has not yet reported its third-quarter numbers.
Sprint’s Hesse sang a similar tune about the mobile business. “On the consumer side, wireless has become a staple,” he said. “People would rather give up their TV or Internet access before they give up their cell phone. We believe we are more insulated.”
He pointed out the traditional telcos’ weakness was in wireline residential phones. Consumers are more likely to cancel their residential phone than their mobile phone service, he said.
Seidenberg said the loss of residential phone subscribers is a decade-long trend and has nothing to do with the economic situation. Hesse’s point is that the economic situation will accelerate the decline in landline subscribers.
Not only was Seidenberg not bearish, he was downright bullish. He said people spend more time at home using their computers and watching TV during periods of economic stress than they do when there’s prosperity.
“If people travel less, they are home more,” he said. “And if they are going out to eat less, they are home more. And that’s likely to mean they will spend more time on their computers or using other applications.”
“If the economy takes a big dip, we will see a slightly lower level of growth,” he said. “We don’t want to be na’ve about this. We think there will be some impact. But we will be OK.”
Seidenberg also expects companies like Verizon will help create jobs because of their role in the communications infrastructure.
“This credit crisis will create some dislocation,” he said. “But the fundamental issue for American industry is to create new jobs. If we do that, I can’t imagine a company like ours won’t have a role in that process.”