7/21/2010 11:46:00 AM
Tesco pushes 12 month contracts
Tesco Mobile is moving aggressively into shorter term contracts. The retail giant has launched six 12 month deals, which include a smartphone and a one year contract on the 16GB iPhone 4, with an up front payment of £229 and monthly payments of £35.
The move is part of Tesco’s onslaught on the contract market, which began earlier this year. Tesco Telecoms chief operating officer David Taylor (pictured) said a survey carried out by Tesco revealed that customers want shorter contracts.
He added: ‘There needs to be more choice in the market when it comes to mobile contracts. Financial uncertainty and rapidly advancing technology means that there are a lot of people who don’t want to be tied to their mobile. Tesco Mobile prides itself on customer service and responding to consumer needs, and we hope this move will shake up the market and give choice back to the consumer by winning back the space for 12 month contracts.’
He added: ‘Technology moves so quickly that many customers also want to replace their handsets every year, so being locked into a two year contract doesn’t meet their needs at all.’
The survey of Tesco customers revealed that 38% considered their mobile phone out of date within a year of the contract start date, with 48% of those with 18 or 24 month contracts spending £40 to £100 on a new handset before their contract expires.
Strand Consult MD John Strand said Tesco’s size gave it the edge over rivals when it comes to the range of 12 month deals.
‘A lot depends on the subsidies and the dealer commissions. Tesco sells through its own distribution channel so it doesn’t have to worry about dealer commissions,’ he added.