Pay as you talk boost for mobiles

THE GROWING popularity of "pay-as-you-talk" services has provided a further boost for Britain's mobile phone companies, according to new quarterly figures out yesterday.

Vodafone, Orange, Cellnet and One2One all reported bumper new subscriber figures for the first three months of this year showing a total of 1.87 million new subscribers.

The figures mean that almost 15 million people in the UK now own mobile phones, with pay-as-you-talk services accounting for a rapidly growing share. Analysts said pay-as-you-go services could now account for nearly half the mobile phone market, up from 22 per cent at the end of last year.

Consumers are opting for the greater flexibility of not having to sign a fixed-term contract, even though it means paying higher phone tariffs.

Yesterday's figures showed the three months to March to be the second- best quarter ever for the mobile phone sector. Vodafone added 700,000 customers, raising its total by 14 per cent to 5.57 million. Cellnet added a net 479,000 customers, a rise of 17 per cent, while Orange and One2One added 370,000 and 329,000 new customers respectively.

Orange reported growth in its contract business, although it admitted that churn in this service - that is, the proportion of people leaving - had risen from 20.5 per cent to 21.7 per cent.

The acceleration in new subscribers boosted mobile share prices yesterday. Orange closed up 34p at 928p and Cable & Wireless, joint owner of One2One, was up 23.5p to 775.5p.

Analysts at Investec Henderson Crosthwaite said the continued growth in subscriber numbers would continue to be good for share prices, but the longer-term issue would be the churn rates. The industry still faces a strategic problem in generating "lifetime customers", it said.

Although this sector has had a terrific run in the past year, analysts rate Vodafone a long-term buy, mainly on the back of its merger with AirTouch of the US. Caution is urged on Orange, where the rating is seen as a little too high.