Rivals close mobile gap on Vodafone and Orange

Orange and Vodafone lost market share in the UK mobile phone market last year as Virgin Mobile, mmO2 and T-Mobile gained ground.

Orange and Vodafone lost market share in the UK mobile phone market last year as Virgin Mobile, mmO2 and T-Mobile gained ground.

With mmO2 and Orange yesterday announcing customer numbers for the past three months of 2003, analysts were able to calculate final market shares for 2003, having already had figures from Vodafone, T-Mobile and Virgin Mobile over the past two weeks.

Figures from Strategy Analytics, the consultancy firm, show that Orange, owned by France Telecom, fell from 26.1 per cent to 25 per cent while Vodafone fell to 25.6 per cent from 26 per cent.

The winners were Virgin Mobile, which increased from 4.7 per cent to 6.7 per cent, and mmO2, which rose from 23.5 per cent to 23.9 per cent.

T-Mobile, which supports Virgin Mobile's customers on its network, went from 24.4 per cent to 25 per cent, although when Virgin Mobile's customers are stripped out T-Mobile fell from 19.8 per cent to 18.3 per cent.

3UK, which has pioneered the use of advanced third generation (3G) mobile phones in the UK, scored a market share of 0.5 per cent. It is hoping the imminent launch of its pre-pay service, probably by the end of March, will kick-start sluggish customer numbers.

Although Orange lost market share overall, it was able to announce UK gains of 278,000 new customers for the final three months of last year. This was double the previous quarter, taking its customer base to 13.65 million. It said revenue per user rose to £271 from £259 in the same quarter a year ago.

However, mmO2 announced 430,000 new customers for the three months to 31 December, taking its base to 13.05 million customers and revenue per user of £264, an 8.6 per cent increase on 2002. But the company immediately ran into a spat with Virgin Mobile over where the growth in the UK mobile market was coming from.

Peter Erskine, the chief executive of mmO2, said that some operators were able to claim big customer bases because they retained dormant customers on their databases for longer. "A lot depends on your definition of churn," Mr Erskine said, addingthat mm02 counted customers as dormant if their account had not been active for three months. "Virgin do it after 12 months so you have to conclude that some customers are not that active on some [customer] bases."

A spokesman for Virgin Mobile said: "We're flattered mmO2 is concerned by the size of our numbers. Clearly they are worried by the rate of our growth."

While the competition between mobile phone operators is intense, so too is the battle among the handset manufacturers. Global handset sales soared 24 per cent last year to 516.2 million, according to Strategy Analytics. Of that, Nokia's market share was 34.8 per cent compared with 35.1 per cent in 2002. The big winners were LG, the South Korean manufacturer, and Samsung. LG saw its market share surge from 3.7 per cent to 5.3 per cent while Samsung rose from 9.8 per cent to 10.8 per cent.