9/6/2010 1:43:00 PM
Analysts predict supermarket tariff price war
Analysts are predicting a price war in the 'value' segment of the market, following the announcement of Asda's new Sim-only tariff.
Strand Consults analyst John Strand has predicted that Asda’s £25 per month Sim-only deal will create a price war in the UK market.
‘A price war of this kind will have an impact on retailers’ commissions and subsidies, as it could lead to much more focus on Sim-only and not as much on devices. It will also force operators to lower their tariff prices as well.’
The supermarket MVNO has launched a £25 per month tariff offering unlimited calls and texts today (6 September).
Strand said: ‘Tesco will probably respond very quickly to those prices’.
Tesco Mobile offers a similar Sim-only deal of unlimited calls and texts for £30 per month, which was launched in July last year.
At the time of the tariff launch, Tesco Mobile and Telecoms CEO Lance Batchelor said: ‘Ours is the only pay monthly deal that gives consumers truly unlimited calling and texting. You don’t have to choose if you’re a chatterbox or a texter, you can use your mobile as much as you want without having to worry about the cost.’
Strand believes that the move from Asda Mobile represents a development that the UK market has been waiting for.
He added: ‘A £25 tariff is cheap, particularly from a UK perspective. What you will see now in the UK is a price war where you have the operators on one side and the MVNOs on another and this will lead to a price war. We have already seen this happening in Holland, Germany and Denmark.
Meanwhile, analyst house Ovum has predicted that 'no frills' operators will see an uplift in sales over the next five years and supermarkets are well placed to take advantage of any interest.
Ovum practice leader Jeremy Green said: 'Connectivity is increasingly perceived as a straightforward commodity, so we
expect to see an increase in the ‘no frills’ market, driven mainly by the
predictably, Tesco, which partnered with O2 to launch Tesco Mobile in 2003, is
one of the most successful in the ‘no frills’ mobile arena and has been able to
expand its offering into Ireland and Slovakia, where both parties are present.'