Smaller U.S. Telecom Firms Face Tough Revenue Growth Prospects

An analysis by Fitch Ratings will confirm what you might expect: smaller U.S. service providers are encountering problems generating organic revenue growth. 

In large part, that is because sales of legacy products are slowing. That, in large part, also accounts for the recent merger and acquisition activity wtihin the U.S. cable TV business, Fitch Ratings says. 

"Operators are faced with maturing product and service portfolios and unrelenting competitive pressures," Fitch Ratings notes. As always is the case, when organic growth becomes difficult, public companies will look out of region for acquisition targets, essentially substituting acquired customers and revenue for growth in the existing territories. 

Fitch Ratings says such "grow by acquisition" strategies will be more important in the future. It's hard to disagree with that forecast.