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Mobile Network Providers - UK - January 2018

“Competition from MVNOs has driven down prices, while an increasing tendency to buy smartphones outright has given consumers more flexibility in their contract choice. The importance of data allowances has sustained the market but increased personalisation and the rewarding of long-term customers will be vital as the growth of eSIMs reduces inertia”.

– Adrian Reynolds, Consumer Technology Analyst

This report examines the following issues:

  • Fight the threat of eSIMs by rewarding long-term customers
  • Personalised data allowances could boost loyalty

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Market struggling for growth as price pressure rises
              • Figure 1: Value of retail mobile networks connections in the UK, 2012-22
            • 4G connections continue to surge with 5G on the horizon
              • Figure 2: Number of mobile connections with access to 4G services, 2013-16
            • Companies and brands
              • Big four networks continue to dominate three quarters of market
                • Figure 3: Network usage, October 2017
              • The consumer
                • Clear rise in popularity of SIM-only contracts
                  • Figure 4: Network contract type, October 2016 and October 2017
                • Nearly a quarter of people pay £10 or less per month
                  • Figure 5: Contract price, October 2017
                • Millennial data consumption driving up average contract payment
                  • Figure 6: Contract price, by selected demographics, October 2017
                • Nearly a quarter of people have 6GB+ per month data allowance
                  • Figure 7: Data allowance, October 2017
                • Two thirds of people have been with their network over two years
                  • Figure 8: Time with network, October 2016 and October 2017
                • Vast majority are satisfied with their network provider
                  • Figure 9: Network Satisfaction, October 2017
                • Data remains the leading reason for switching network
                  • Figure 10: Network switching factors, October 2017
                • What we think
                • Issues and Insights

                  • Fight the threat of eSIMs by rewarding long-term customers
                    • The facts
                      • The implications
                        • Personalised data allowances could boost loyalty
                          • The facts
                            • The implications
                            • The Market – What You Need to Know

                              • Market struggling for growth as price pressure rises
                                • Ofcom reports increasing shift to inclusive bundle services
                                  • Blended average monthly revenue rises after years of decline
                                    • Necessity of smartphones will drive connections forward
                                      • Growth in connected devices has driven network connections
                                        • 4G connections continue to surge with 5G on the horizon
                                          • Continued reliance on mobile calls as fixed lines decline
                                          • Market Size and Forecast

                                            • Market struggling for growth as price pressure rises
                                              • Leading network providers report mixed results in 2017
                                                • Figure 11: Value of retail mobile networks connections in the UK, 2012-22
                                                • Figure 12: Value of retail mobile networks connections in the UK, 2012-22
                                              • Ofcom reports increasing shift to inclusive bundle services
                                                • Figure 13: Mobile retail revenue, by service (£ billions), 2011-16
                                              • Blended average monthly revenue rises after years of decline
                                                • Figure 14: Average monthly revenue per subscription, by contract type, 2011-16
                                              • Necessity of smartphones will drive connections forward
                                                • Figure 15: Volume of retail mobile network connections in the UK, 2012-22
                                                • Figure 16: Volume of retail mobile network connections in the UK, 2012-22
                                              • Forecast methodology
                                              • Market Drivers

                                                • Growth in connected devices has driven network connections
                                                  • Figure 17: Ownership of smartphones, smartwatches and tablets, January 2013-June 2017
                                                • iPhone X drives monthly contract fees to a new high
                                                  • Figure 18: Apple’s iPhone X
                                                • 4G connections continue to surge, with 5G on the horizon
                                                  • Figure 19: Number of mobile connections with access to 4G services, 2013-16
                                                • Removal of EU roaming charges aids usage abroad
                                                  • Continued reliance on mobile calls as fixed lines decline
                                                    • Figure 20: Outgoing fixed and mobile voice call volumes, 2010-16
                                                • Companies and Brands – What You Need to Know

                                                  • Big four networks continue to dominate three-quarters of market
                                                    • EE remains the most popular network provider
                                                      • O2 Oops offers inclusive screen repair
                                                        • Apple Watch 3 introduces cellular service
                                                          • Lack of market growth putting pressure on advertising budgets
                                                            • O2 and Vodafone are more trusted but rarely deemed good value
                                                            • Market Share

                                                              • Big four networks continue to dominate three quarters of market
                                                                • Figure 21: Network usage, October 2017
                                                              • EE remains the most popular network provider
                                                                • Figure 22: Network usage, October 2016 and October 2017
                                                            • Launch Activity and Innovation

                                                              • O2 Oops offers inclusive screen repair
                                                                • Figure 23: O2’S Oops campaign
                                                              • Ease of switching networks boosted by eSIMs
                                                                • Apple Watch 3 introduces cellular service
                                                                  • Figure 24: Apple Watch 3 with cellular service
                                                                • Vodafone Passes offer unlimited data for key apps
                                                                  • Three launches Go Binge service
                                                                  • Advertising and Marketing Activity

                                                                    • Lack of market growth putting pressure on advertising budgets
                                                                      • Big four all retain strong TV advertising presence
                                                                        • Figure 25: Recorded above-the-line, online display and direct mail total advertising expenditure on mobile network services, by advertiser, 2015-17
                                                                      • Nielsen Ad Intel coverage
                                                                      • Brand Research

                                                                          • Brand map
                                                                            • Figure 26: Attitudes towards and usage of selected brands, October 2017
                                                                          • Key brand metrics
                                                                            • Figure 27: Key metrics for selected brands, October 2017
                                                                          • Brand attitudes: O2 and Vodafone are more trusted but rarely deemed good value
                                                                            • Figure 28: Attitudes, by brand, October 2017
                                                                          • Brand personality: Vodafone perceived as a the least fun brand
                                                                            • Figure 29: Brand personality – Macro image, October 2017
                                                                          • Efficient, reliable service is boosting perceptions of EE and O2
                                                                            • Figure 30: Brand personality – Micro image, October 2017
                                                                          • Brand analysis
                                                                            • Giffgaff the most recommend brand by users
                                                                              • Figure 31: User profile of giffgaff, October 2017
                                                                            • EE‘s upbeat brand image weighted towards men and Millennials
                                                                              • Figure 32: User profile of EE, October 2017
                                                                            • O2 is a reliable brand that retains cutting-edge appeal
                                                                              • Figure 33: User profile of O2, October 2017
                                                                            • Three struggles to resonate as a brand
                                                                              • Figure 34: User profile of Three, October 2017
                                                                            • Vodafone the least recommended network by users
                                                                              • Figure 35: User profile of Vodafone, October 2017
                                                                          • The Consumer – What You Need to Know

                                                                            • Clear rise in popularity of SIM-only contracts
                                                                              • The majority of people sign up to 18 months or more
                                                                                • Nearly a quarter of people pay £10 or less per month
                                                                                  • Nearly a quarter of people have 6GB+ per month data allowance
                                                                                    • Younger age groups paying for bigger data allowances
                                                                                      • Two thirds of people have been with their network over two years
                                                                                        • Vast majority are satisfied with their network provider
                                                                                          • Data remains the leading reason for switching network
                                                                                          • Network Contracts

                                                                                            • Clear rise in popularity of SIM-only contracts
                                                                                              • Increase in payment methods means networks must offer flexibility
                                                                                                • Figure 36: Network contract type, October 2016 and October 2017
                                                                                              • Older Millennials most likely to have contracts with phone
                                                                                                • Figure 37: Contract type, by generation, October 2017
                                                                                              • The majority of people sign up to 18 months or more
                                                                                                • Figure 38: Contract length, October 2017
                                                                                              • Annual contracts rise to 24% from 20%
                                                                                                • Figure 39: Contract length, October 2016 and October 2017
                                                                                              • Older Millennials focused on long-term, consistent contracts
                                                                                                • Figure 40: Contract length, by selected demographics, October 2017
                                                                                            • Price of Contract

                                                                                              • Nearly a quarter of people pay £10 or less per month
                                                                                                • Figure 41: Contract price, October 2017
                                                                                              • Increasing shift from mid-level to expensive contracts
                                                                                                • Figure 42: Contract price, October 2016 and October 2017
                                                                                              • Women more likely to pay higher contract prices
                                                                                                • Millennial data consumption driving up average contract payment
                                                                                                  • Figure 43: Contract price, by selected demographics, October 2017
                                                                                                • Rewarding long-term customers could boost higher price contracts
                                                                                                  • Figure 44: Contract length, by average contract price, October 2017
                                                                                                • The majority of PAYG customers pay under £10 per month
                                                                                                  • Figure 45: PAYG spend, October 2017
                                                                                              • Data Usage

                                                                                                • Nearly a quarter of people have 6GB+ per month data allowance
                                                                                                  • Figure 46: Data allowance, October 2017
                                                                                                • Younger age groups paying for bigger data allowances
                                                                                                  • Figure 47: Data allowance, by generation, October 2017
                                                                                                • Over half of people do not use their entire data allowance
                                                                                                  • Figure 48: Data usage, October 2017
                                                                                              • Network Satisfaction

                                                                                                • Two thirds of people have been with their network over two years
                                                                                                  • Figure 49: Time with network, October 2016 and October 2017
                                                                                                • Vast majority are satisfied with their network provider
                                                                                                  • Additional services and promotions can boost satisfaction
                                                                                                    • Figure 50: Network Satisfaction, October 2017
                                                                                                  • Phone calls are the preferred contact method…
                                                                                                    • …but Millennials are more focused on digital contact points
                                                                                                      • Figure 51: Network contact preferences, October 2017
                                                                                                    • Half of people focus on one contact method
                                                                                                      • Figure 52: Repertoire of network contract preferences, October 2017
                                                                                                  • Network Switching Factors

                                                                                                    • Data remains the leading reason for switching network
                                                                                                      • Millennials most likely to switch for additional data and streaming services
                                                                                                        • New smartphones still a major draw
                                                                                                          • Free screen repair is likely to grow in importance
                                                                                                            • Figure 53: Network switching factors, October 2017
                                                                                                          • Millennials finding more reasons to change network
                                                                                                            • Figure 54: Repertoire of network switching factors, October 2017
                                                                                                          • One third of people are likely to change contracts upon expiry
                                                                                                            • Men much more likely to change contracts
                                                                                                              • Networks must push family bundles to reduce switching
                                                                                                                • Figure 55: Likelihood of switching in-contract versus end of contract, October 2017
                                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                • Abbreviations
                                                                                                                  • Consumer research methodology
                                                                                                                    • Market size and forecast
                                                                                                                      • Fan chart forecast
                                                                                                                        • Value
                                                                                                                          • Figure 56: Best- and worst-case forecast for the value of the UK mobile network providers market, 2017-22
                                                                                                                        • Volume
                                                                                                                          • Figure 57: Best- and worst-case forecast for the volume of the UK mobile networks providers market, 2017-22
                                                                                                                        • Brand research
                                                                                                                          • Brand map

                                                                                                                          Mobile Network Providers - UK - January 2018

                                                                                                                          US $2,552.20 (Excl.Tax)