The total number of mobile connections in the UK surpassed 70 million during the fourth quarter of 2007, finishing the year on 70.99 million. In total there were 4.10 million net additions during the year, up from 1.35 million in 2006, while on a proportionate basis the annual customer growth rate almost tripled from 2.1% to 6.2%. This was due in part to the one-off loss of 1.30 million customers in 2006 as a result of T-Mobile's change in policy regarding active users, but even if we discount this there would have been an increase in customer growth in 2007. This is despite the fact that penetration is well over 100%: at the end of 2007, in fact, the penetration rate had reached 116.5%, up from 110.1% a year earlier.

The key to the year's strong customer growth was the performance of Vodafone, which added 2.06 million active customers, over half the total net additions for the market in 2007. It finished the year with an estimated 16.75 million active subscribers, up 14.1% year-on-year, compared to a 0.9% decline in 2006.

Vodafone was the only operator to record double digit customer growth in 2007, although Hutchison was not too far off with an 8.4% annual growth rate. Market leader O2 - the only operator to record over 10% growth in 2006 - saw a 4.4pp drop to 6.7% in 2007. However, it still managed to record a 0.2pp increase in market share to 28.4%, as well as breaking the 20 million barrier in Q4 to finish the year with 20.13 million active customers.

Vodafone saw the greatest gain in market share, however, adding 1.6pp to reach 23.6%.

Orange, which saw its second place taken by Vodafone in Q1 07, lost 0.8pp of share in the year to finish on 22.1%. It added just 0.31 million customers in 2007, down from 0.48 million in 2006, and ended the year with 15.64 million connections. In fourth place, T-Mobile saw its fifth successive yearly decline in market share, ending 2007 down 0.5pp on 14.5%. It did at least manage a net gain in customers, although the increase was only 0.26 million.

Virgin, which operates as an MVNO on T-Mobile's network, was the only operator of the top six to see a net loss of customers in 2007, dropping 31.4k as a result of a poor performance in the first half of the year. It lost 0.5pp of market share in the year to finish on 6.3%. Finally, Hutchison added 0.24 million in the year to finish on 3.11 million, with market share up 0.1pp at 4.4%.

The 2nd chart offers a comparison of the ARPU figures for the top four operators. It should be noted that since not all four publish a quarterly average for monthly ARPU, certain adjustments have been made for the sake of comparability: T-Mobile's figure is only released in Euros, so has been converted to pounds sterling using the relevant exchange rates, while Orange's monthly figure has been derived from the annual average that it publishes. The chart demonstrates that O2 has maintained the highest ARPU figure of the top four for the past three quarters, the increase in ARPU in 2007 suggesting that the company has been focusing on increasing customer value rather than on raw customer growth. Vodafone, by contrast, has paid for its strong customer growth with a fall in ARPU. Meanwhile, the upward trend of T-Mobile's ARPU has seen it match Orange's Q4 07 figure of £22.10, although both companies' figures should be approached with a degree of caution for the reasons stated above.

Posted to the site on 15th April 2008

This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World.

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