5/21/2008 11:41:00 AM
O2 toasts success of its Sim-only tariff, Simplicity
O2 says it is outperforming the UK market thanks to the success of its Sim-only tariff, Simplicity, as shown by strong contract growth in the operator’s Q1 figures.
Orange was the first operator to launch Sim-only deals in the UK and all the other networks quickly followed suit.
Last summer O2 used a high-profile marketing campaign to launch Simplicity, which offers low-cost postpay deals on a 30-day rolling contract. The tariff now accounts for over one third of all O2 online sales with customer numbers shortly set to pass the half-a-million mark.
O2’s first quarter results last week revealed revenue growth of 12.6%, and the addition of 206,385 new contract customers, taking the total UK customer base up 3.7% to 18.4 million.
The number of prepay customers fell by 185,233 to 11.4 million during the quarter, which O2 put down to disconnections following the Christmas period and migrations to the likes of Simplicity. Contract customers now make up 38.1% of O2’s total base compared with 35.5% in March 2007, highlighting an increasing migration of customers from prepay to contract.
Telefonica O2 Europe chief executive Matthew Key (pictured) said the quarterly results were O2 UK’s best ever for Q1 contract customer additions and growing the company’s revenue market share.
He said: ‘Building on our success in the UK, we are now looking to export the concept to other territories including Ireland and Germany.
‘As our customers face a more uncertain economic climate, we found some of our users telling us that, while they were looking for the value that contracts offered, they did not necessarily want to commit to a long-term tie-in and were worried about maintaining control of their mobile spend.
‘Although we designed ‘Simplicity’ to address these requirements, the take-up has surpassed even our own expectations and we see the no lock-in model becoming a more prominent feature in all of our markets in the future,’ he said.