Prepay dominates mobile phone uptake

Demand for prepaid mobile phone services continues to increase at double the rate of the contract market and will account for 80 per cent of new subscriptions over the next five years, according to a new report by Informa Telecoms & Media.

‘Global Mobile Prepaid Strategies and Forecasts to 2013’, which includes the results of Informa’s 2008 Global Mobile Industry Survey, reports that at the end of 2007 prepaid subscriptions stood at 2.33 billion worldwide and generated annual revenues of $241.9bn. By far the largest market was Asia Pacific, with 43 per cent of global subscriptions and almost 30 per cent of revenues.

Informa predicts that by 2013 there will be 3.93 billion prepaid subscriptions, generating revenues of $382.2bn. Although it believes growth will slow to just over 9 per cent a year between now and 2013, four out of five new subscriptions will be prepay.

Growth will come from very-low-income customers in developing markets, existing prepaid customers prepared to increase their spending on value-added services, and contract customers using prepaid bolt-ons for services such as mobile broadband.

The report also found that the number of people owning multiple SIMs continues to rise. At the end of 2008, about 28.9 per cent of subscriptions worldwide will be accounted for by additional cards.

“Operators may be forced to consider whether issuing SIM cards is a sustainable way of increasing the lifetime value and profitability of individual customers,” says Informa. “Understanding prepaid customers’ individual value expectations rather than how many SIM cards are in circulation may be a more reliable route to long-term improvements in ARPU and profitability.”

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