Tesco Mobile is aiming to topple Virgin as the leading MVNO in the UK after record growth through 2010 was topped off with strong Christmas sales.
Tesco Mobile CEO Lance Batchelor, who is leaving the company in March (see bottom story), said the MVNO is heading for the number one spot in the UK after experiencing its best ever Christmas sales and hitting the 2.5 million customer mark on Christmas Day.
The retailer reports that tens of thousands of Tesco Mobile handsets were activated on Christmas Day, with the iPhone proving the most popular Christmas gift for its customers.
The Christmas figures top off a year of growth for Tesco Mobile, which delivered double digit airtime growth in every quarter of 2010.
Tesco Mobile also grew both its pay-as-you-go and contract base in every quarter of 2010, increasing customer numbers by 25% through the year.
The retailer claims much of the growth has been driven by Tesco Mobile’s 12 month iPhone contract.
Lance Batchelor, CEO of Tesco Mobile and Tesco Telecoms said: ‘Tesco Mobile is well on its way to becoming the number one MVNO in the UK. It is continuing to grow its pay-as-you-go and pay monthly base in a declining market space, which highlights the network’s appeal to our mobile savvy nation.
‘We have a unique position in the mobile market place because we are able to reward customers in hundreds of ways through Clubcard. We’re focused on giving consumers real and valuable rewards that encourage their loyalty and help them get the best value from their provider.
He said the rapid expansion of Tesco Phone Shops in 2010 had also driven growth.
A Virgin Media spokeswoman said: ‘We are focused on growing our pay monthly customers, up 32% over the past year.’
She said contract sales had helped increase ARPU by 12%, and confirmed that Virgin is focused on cross-selling mobile contracts, with one or more contract mobiles already in 516,500 cable households.
What the analysts say
Phil Kendall, telecoms analyst at Strategy Analytics
‘The rise of Tesco Mobile is more of a threat to operators at the value end of the market, such as T-Mobile, rather than to Virgin Mobile.
‘Tesco Mobile’s figures show impressive growth. Last year was fairly tough for mobile operators so Tesco Mobile’s 25% growth certainly outperforms the market as a whole, and the doubling of minutes year-on-year every quarter means Tesco Mobile’s contract base is doing very well.
‘Virgin’s growth in mobile is coming from its postpaid customer base rather than prepaid so the extent to which Tesco Mobile is scaling up in the contracts market is something Virgin Mobile would need to address, but with its quad-play focus it is not really massively over-exposed to what Tesco Mobile is doing.
‘It is probably only a matter of time before Tesco Mobile overtakes Virgin Mobile in customer numbers, but I think Virgin is more bothered about how to get the 10 million members of the four million households they serve to take contracts for mobile services with them.
‘I would say those operators brands at the value end of the market such as T-Mobile will be more concerned as they are much more exposed to Tesco Mobile’s expansion than Virgin is with its quad-play ambitions.’
Sam Hart, retail analyst at Charles Stanley
‘The key to Tesco Mobile’s success is their distribution network, which allows them to have Phone Shops located within existing stores with extremely high footfall rates, and their ability to entice the female demography of their customer base – who may not be willing to go into a high street phone shop like Carphone Warehouse – into their Tesco Mobile shops.
‘That combination leaves the door open for further strong growth through 2011.’