Friday, January 18, 2008

O2 customer numbers soar on iPhone interest

By Nic Fildes

Apple's iPhone has lived up to expectations as the most-talked about handset ever released, with O2 revealing that its successful bid to sell the device exclusively in the UK had triggered a three-fold increase in the number of people visiting its stores over the past two months.

The iPhone is only available in the UK in O2 and Apple stores and in Carphone Warehouse's extensive chain. The O2 figures will please investors in Carphone Warehouse, where the shares have come under pressure over recent weeks on concerns that iPhone sales have not matched the hype as a result of a slowdown on the UK high street in the wake of the credit crunch. Carphone reports results today but will not detail the number of iPhones it has sold due to a non-disclosure agreement with Apple.

The iconic mobile phone has generated substantial interest among O2 consumers. Just having the device on the shelves has tempted three times as many customers into its 450 stores in the UK than in the same period a year earlier, said a company spokesman.

Even though many of those customers may have decided against spending £269 to buy the handset, some may have been tempted to replace their phone with a newer model anyway after seeing the functionality of Apple's handset. Customers that at least flirted with the idea of buying an iPhone and subscribing to a £35-a-month contract are likely to be high-spending contract customers, a key target market for mobile phone companies looking to whittle down the number of low-paying prepay customers they support.

The retail footfall boost will increase confidence that O2 had a good quarter in the run-up to Christmas with some investors nervous that the credit crunch may have curtailed growth rates over a period usually characterised by a significant pick-up in demand.

The company, which is owned by Spain's Telefonica, will report results in late February. Reports of pressure in the prepay market over Christmas are less likely to impact O2 than some of its rivals given the company has been shedding low-paying pay-as-you-go customers over the past year.

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