Promotions help telecoms brands in UK

25 August 2010

LONDON: Promotions and improving consumer sentiment are helping telecoms brands escape almost two years of slowing sales in the UK, new figures have shown.

GfK, the research firm, reported that category sales climbed by 5.2% year-on-year in the second quarter to reach 7.5m handsets overall, with June delivering an uptick of 6.8%.

This marked the first time the sector has enjoyed three months of consecutive growth since Q3 2008, just prior to the UK falling into recession.

Primary contributors to this emerging positive trend included the popularity of pre-pay schemes and special offers tempting shoppers to invest in a new phone, Ben Mansell, an analyst at GfK, argued.

"The slowdown in pre-pay has in the past overshadowed the success of contract," he said.

"However, a series of successful promotional activities across the industry has pushed the pre-pay market back into growth, taking the total market with it. The recession may be lifting from the industry."

One factor that could inhibit future expansion is the widespread use of longer agreements than was the case previously.

Recent statistics by Ofcom, the communications regulator, showed 80% of contracts paid on a monthly basis now last for a minimum 24 months, an increase from 18 months in 2006.

Sim card only deals, where customers retain their current handset and simply swap provider, also hold a 20% share of new connections, Ofcom found.

Data sourced from GfK/Financial Times; additional content by Warc staff