May 12, 2009 / 10:27 AM / 10 years ago

UK telcos face price-savvy consumers

FRANKFURT (Reuters) - British consumers are expected to cut back even further on their communications spend in the months ahead, a study found, adding additional pressure to telecoms who have already seen profits shrink.

An analysis of consumer behavior in Britain by Booz & Company found that a quarter of consumers have already reduced their communication and media spending and a further 26 percent will cut back over the next six months.

According to the survey, 45 percent of telecoms consumers questioned will consider bundling media services and 44 percent plan to use more internet-based phone services such as Skype.

Some 23 percent may cancel their broadband/TV subscription and 43 percent will use their landline more often.

A quarter of those surveyed said they may stop using their mobile phone altogether, while 45 percent said they will consider delaying the purchase of a new mobile phone and 43 percent said they would switch to a cheaper mobile contract.

In Britain, mobile operators O2 and British telecoms group Vodafone are market leaders followed by Orange, T-Mobile UK and 3, owned by Hutchison Whampoa.

“Operators need to not only review their product and service offerings in the short term, but also think about their long-term strategy, as customers are becoming more savvy about the way they purchase and use services,” said Michael Peterson, head of Booz & Company’s UK CMT practice.

“The operators that can recognize and adapt to these changes will emerge strongest from the recession,” he added.

In the long term, consumers would be unlikely to revert back, having gone to the effort of switching providers, and telecoms will have to prepare for less brand loyalty, more bundling of services and shrewd consumers looking for inexpensive offers, the study showed.

Booz & Company said it surveyed 1,800 British consumers between February 17 and 24.

Reporting by Nicola Leske; editing by Simon Jessop

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