Tesco has started to flex its muscles in the mobile phone market after snapping up a third of new pre-pay connections in 2006 and becoming the second largest retailer of pay-as-you-go handsets in the UK.
Tesco Mobile, a joint venture between the supermarket giant and the mobile phone operator O2, said it was now the fastest growing operator in the UK after it added 420,000 new customers during 2006, equating to a 43 per cent increase in its customer base to 1.4 million over the year.
The company put on more pre-pay customers than the combined total for T-Mobile, Vodafone, Virgin Mobile and Carphone Warehouse's network Fresh. The growth comes as many established operators like Vodafone and Orange have stopped targeting pay-as-you-go growth and have focused on moving customers on to contracts.
Andy Dewhurst, the chief executive of Tesco Mobile, said the company had been snapping up a lot of younger customers from the likes of Virgin Mobile who are attracted to cheap tariffs that cost as little as 10p a minute for a voice call and 5p for a text. He added that the company had benefited from increasing the number of handsets it offers to 25.
"It's amazing how many people don't know what they pay for a phone call. They do with Tesco as we charge a simple flat rate," Mr Dewhurst said. He said the company was weighing up an entry into the contract market but that it was still "early days" in terms of its plan.
The retailer also said that only Carphone Warehouse sold more pre-pay handsets during 2006 as the supermarket chain grabbed a near 12 per cent stake of the market. The company sells services from other operators alongside its own-branded handsets.
Mr Dewhurst said that four years ago Tesco was not a top-10 player in the mobile phone retail market but that it had now overtaken the likes of Phones4U in pre-pay volumes. "We've worked really hard to become a destination to buy a mobile phone in the UK," he said. Mr Dewhurst said many customers did not like being pressured by sales staff as is the case with other mobile phone retailers.Reuse content