T-Mobile UK sees drop in mobile customers

T-Mobile UK has revealed that it lost three percent of its mobile customers last year, as competitors strengthened their products and the battle between the iPhone and the G1 Android phone got going.

Over 2008, the operator's number of mobile customers in the UK dropped from 17.3 million to 16.8 million, the operator's parent company, Deutsche Telekom, told investors on Thursday. The drop was unusual, compared with T-Mobile networks in other countries. Almost all of these experienced growth in their customer bases over the same period — the other exception being T-Mobile Slovakia, which saw a 0.8 percent drop. Overall, Deutsche Telekom's various mobile networks experienced customer base growth of 6.3 percent.

"The decline in 2008 customer numbers can be attributed in part to a 4 percent contraction of the overall UK prepay market [over 2008]", a spokesperson for T-Mobile told ZDNet UK on Monday. The spokesperson added that a drop in the performance of T-Mobile's mobile virtual network operators (MVNOs) — partners of the operator who resell its service under other brand names — accounted for 56 percent of the overall year-on-year decline.

T-Mobile also noted a drop in new customers buying its pay-as-you-go SIM cards, blaming this on market conditions, the increase in Eastern European migrant workers leaving the UK, and pay-as-you-go customers upgrading to SIM-only contracts. The operator claimed, however, that its number of contract customers had increased by 101,000 over 2008.

Telecoms analyst Dean Bubley told ZDNet UK on Monday that T-Mobile UK has strong competition from 3 at the low end of the market, as well as from Vodafone in the SIM-only market. "In the UK, the contract market has shifted towards SIM-only deals, and some operators have more aggressive than others in pursuing that," the Disruptive Analysis analyst said.

Bubley also noted O2's success with the iPhone in the UK. T-Mobile UK's exclusive smartphone, the G1 Android phone, had not been as successful as the Apple handset, he pointed out. T-Mobile has exclusive mobile service rights on the iPhone in Germany, and has attributed growth in its German customer base to that fact.

"The G1 has had nowhere near the effect for T-Mobile as the iPhone as had for O2 in the UK," Bubley said. "People switch to O2 to get iPhone, but as far as I can tell they are not switching to T-Mobile to get the G1. The iPhone is perceived as more desirable, more iconic and, by popular acclaim, a nicer device. The G1 could not be described as cool — it will be interesting to see if future Android phones improve on that."

Bubley noted, however, that mobile customer base figures are becoming more difficult to interpret, as the number of customers is derived from the number of the operator's SIM cards in use.

"Frankly, you're getting decoupled from the actual number of users," Bubley said. "Some customers have multiple SIMs, some have shared SIMs, and some have second subscriptions for mobile broadband. The headline number of subscribers is becoming an antiquated metric."