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Mobile phone sales set to double in five years

THE NUMBER of mobile phone subscribers in the UK is likely to double over the next five years, the equivalent of more than one in four adults owning a phone.

Much of this growth is expected to come from pre-paid phones for personal use as mobiles move from being a luxury to a necessity.

However, the shift is also leading to a decline in monthly bills as pre- paid phone users spend less on their phones than subscribers.

The findings - the result of an annual survey of 2,000 adults by the market information firm Continental Research - are published as the battle to sign up pre-paid customers hots up.

Today Asda, the supermarket chain, will start selling Cellnet pre-paid mobile phone packages for just pounds 69.99 - 30 per cent below the recommended retail price. The move follows similar agreements between Vodafone and Tesco.

The report affirms the rapid growth in pre-paid mobiles - phones where users pay for their calls before they make them, removing the need for a contract or a monthly subscription charge.

The phones, which were first introduced last year and have been quickly adopted by all four operators in the UK, are credited with opening up a whole new area of the market for mobiles to include students and people on low incomes.

Continental found that, of all mobile phone users in the D and E socio- economic classes, 20 per cent use a pre-paid phone, compared to 10 per cent in the AB category.

A majority of mobile phone users - 51 per cent - now admit to using their phone "mainly for personal purposes", while only 29 per cent use their phone mainly for work.

Usage has also increased, with 36 per cent of those surveyed saying they used their phones once a day or more - up from 27 per cent last year.

However, monthly bills are falling. The average monthly bill in the survey, including subscription charges, is now pounds 29.84, which is down from pounds 32.96 last year and pounds 36.56 in 1996.

The fall is largely the result of the rising number of pre-paid customers, who on average only spend pounds 20 per month.

This suggests that average revenues per user - a key measure of profitability for mobile phone operators - will fall as mobile phones become more prevalent and begin to displace fixed telephone lines.

"Mobile telephony is fast becoming a commodity product," said Chris Godsmark, telecoms analyst at Henderson Crosthwaite.

"Fixed-mobile convergence means convergence of prices as well as convergence of technologies."

Outlook, page 19