UK mobile phone sales slump

The industry hopes the introduction of third generation phones will boost demand

Mobile phone sales in the UK have slumped dramatically over the Christmas period, a report has claimed.

Handset sales over the last three months of the year are forecast, at less than 5 million, to be under half those achieved a year before, the Daily Telegraph newspaper said.

The number of new subscribers - new customers who did not already own a mobile phone - is also expected to have dropped sharply, from 5.7m in the last three months of 2000 to 1.5m this year.

The news supported the findings of previous studies which have found sales of mobiles declining globally because of economic uncertainty and the delayed introduction of new mobile technology.

And it prompted a fall of 15% in the price of shares in Carphone Warehouse, one of the UK's major mobile phone retailers.

Approaching saturation?

The mature nature of the UK market, where about three quarters of the population already own a mobile phone, has made it increasingly difficult for firms to keep up their rate of subscriber growth.

Also many of the cheap introductory deals have now been withdrawn as the mobile operators have attempted to increase their profit margins.

"We are expecting handset sales in the high fours (of millions)," Peter Richardson of the technology-based investment bank Soundview told the Telegraph.

"Last year was the final year of the pre-pay push and the operators have now backed away from that market."

Upgrades to up demand?

The fact that the majority of people in the UK now own a mobile phone has been reflected by a change in tack by mobile phone retailers.

Recent advertising has concentrated on persuading people to upgrade their old mobile for a more modern handset.

But a report last month from the market research group Gartner Dataquest said consumers were delaying buying new handsets until the new generation of mobile devices are introduced.

The mobile phone industry is hoping the gradual introduction of mobiles using the new high-speed internet general packet radio services (GPRS) technology, and the even more advanced third generation, or 3G, phones, will help to boost demand.

Supermarket squeeze

Carphone Warehouse had expected weaker sales growth, after buoyant trade last Christmas.

But chief executive Charles Dunstone told the Telegraph that supermarkets, which focus on pre-pay phones, had suffered worst from the market squeeze.

Carphone Warehouse shares plunged to 104.5p in mid-morning trade on Monday before closing at 108p, down 15p on the day.