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O2 as consumers cut back on mobile phone spending

O2 as consumers cut back on mobile phone spending

Cost-conscious consumers are increasingly seeking out cheaper tariffs at the end of their contract terms rather than opting for a handset upgrade, according to O2.

In its latest results, the UK subsidiary of Telefonica reported that over the first three months of 2009 the sum it accrues from each customer dropped by 3.6 per cent.

Matthew Key, head of the firm’s European operations, attributed the trend to customers hanging onto their existing handsets at the end of their contract term so that they would qualify for discounts.

Mr Key said: "It is clear that customers are looking to optimise their bundles. Consumers are obviously looking at all their spending in the current climate."

The fall in customers’ average spend meant O2’s quarterly revenue slumped to €1.56 billion compared with €1.75 billion in the corresponding period last year.

However, despite the slowdown the enduring popularity of the iPhone helped O2 to add 141,800 new customers over the course of the quarter to take its total customer base to 20.4 million.

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