More than 36 million – or about 80 per cent of – people in the UK aged 12 and over own or have access to a mobile phone, according to the latest figures from Taylor Nelson Sofres (TNS). While it may not be a surprise that the highest penetration (93 per cent) is among 20to 24-year-olds, the findings also show that there is no significant drop in average penetration levels below the age of 55. Also, nine per cent of users now have more than one mobile phone, suggesting there are about 39 million mobile phones active in the UK.
The syndicated TNS panel, which has been running since the beginning of the year, reveals that Orange now has the greatest share of the UK market with a market share of almost 28 per cent. Vodafone is close behind with 26.5 per cent, followed by BT Cellnet, which has 25.5 per cent. One 2 One – the other of the “Big Four” operators, trails with a market share of just under 18 per cent.
The majority of mobile phone users (67 per cent) are pre-pay customers. Only 28 per cent are contract customers. There is also a third type of deal – pay-in-advance – where customers buy a complete package, usually covering a 12-month period. TNS believes this to be a declining tariff type, since only five per cent of mobile users use these packages.
Vodafone is the clear market leader for contract tariffs with about a third (33.5 per cent) of the UK market. Orange and BT Cellnet have about a quarter of contract customers each. Orange has cornered almost 29 per cent of pre-pay customers, followed by BT Cellnet (25.2 per cent) and Vodafone (23.1 per cent). The dominance of pre-pay is explained by a combination of factors – its convenience, the lack of contractual commitment (especially for the younger and older ends of the market) and cost (particularly where call volume is low).
According to TNS the average pre-pay customer spends about &£10 a month on top-up costs, whereas 16to 19-year-olds are likely to spend about &£16.50 and over-65s would only spend &£3.80. Clearly, therefore, targeting one 16to 19-year-old can be as lucrative as targeting about four over-65s.
Supermarkets emerge as easily the most popular outlets (40 per cent of the market by value) for pre-pay users to buy top-up cards, with newsagents in second place (17 per cent). Petrol stations, post offices and mobile phone specialists collectively account for 15 per cent of purchases.
Overall, Nokia dominates handset sales. It sold over half (51 per cent) of all handsets bought by UK consumers in the last quarter. The next largest manufacturers are Motorola (15 per cent) and Ericsson (ten per cent). No other brands have more than six per cent of the market.
Nokia is the clear brand leader for contract handset sales (78 per cent). However, there is a more even spread for pre-pay handsets, with Nokia accounting for 36 per cent, Motorola 19 per cent and Ericsson 13 per cent of the market.
TNS predicts that there will be a decline in the number of pre-pay handsets sold in the next 12 to 18 months, partly because penetration levels appear to be approaching saturation point. The other reason is that network providers have recently removed retailer subsidies, which will in turn increase the minimum price of a handset significantly (from below &£40 to about &£70) making pre-pay packages considerably less attractive. More than a third of all pre-pay handsets sold in
the second quarter of 2001 were priced below &£40, with retailers such as Argos and the supermarkets prominent in this sector. Cheaper pre-pay handsets have proven popular among older, first-time mobile phone owners, who often use a phone only for emergencies. However, while helping to boost customer numbers for the networks, pre-pay contributes relatively little to revenues.
The long-term future of the mobile phone market is unclear, with uncertainty about how third generation technology will be delivered and its cost implications for users. While it will be interesting to see how much of an impact rising handset prices will have on user numbers, it is clear that mobile phones have become an accepted and integral part of the UK lifestyle, and are likely to remain so.