Handset sales climbed for the first time in two years in September, up 15%, with contract sales hitting an all-time high, research agency GfK has said.
The agency said the previous decline was largely driven by the falling prepay market, which has also hit operator revenues. Another factor was the increase in long-term contracts offered by networks, as operators moved to tie consumers into 24-month deals.
The market bounced back because of a steadying in the 24-month contract cycle. GfK said almost all postpay consumers are now on two-year deals. Additionally, consumers have been sitting on their contracts awaiting the launch of leading smartphone devices. As Mobile previously reported, an unprecedented number of customers were out of contract at the start of the autumn as they awaited device launches such as the iPhone 5. GfK added the handset market was also boosted by an improvement in the prepay performance, with devices priced more affordably.
The research revealed almost 60% of all handset sales were on a contract in September, an all-time high. During the past 10 years, operators have worked to shift their customers away from prepay and onto the more lucrative postpay market. GfK said while prepay had a 70% share 10 years ago, the share of the contract market exceeded 50% during the past two quarters. Yesterday, EE revealed contract customers accounted for 51% of its base.
However, GfK said the increasing importance of contracts was based on a surge in value, rather than an increase in volume, coupled with the decline in prepay sales.
GfK's Ben Tutt said: 'As mobile and smart phone use is more ubiquitous than ever, these statistics seem counter intuitive. The only conclusion is that customers are increasing the amount of time they spend with each device, which is shown by increasing contract lengths and increasing SIM-only propositions. Whilst this might be the case, massive handset launches and new technologies will always be around the corner to tempt customers back into the market.'
Editor: Graeme Neill