Pure Pricing’s Q2 2020 Phone Sim-Only Quarterly Review


Headlines

  • Tipping point reached as >50% of dataset sim-only phone plans require commitment of 12 months or more. The combination of 30-Day PAYM and 30-Day Prepay is now the minority of dataset plans.
  • Weighted average contract term of dataset plans grows to 8.9 months (+8.9% QoQ).
  • Average plan price remains flat at £18.76 (-0.9% QoQ)
  • Average plan allowance remains flat, 30.9% of dataset plans offer 50GB+ (+0.7% QoQ). We are not seeing evidence of operators raising data allowances to meet increased customer demand due to the introduction of 5G into the market so far.
  • 12-Month PAYM offering 20-49GB remains the dataset hotspot, capturing 8.6% of plans on offer.
  • 12-Month PAYM remains the largest subsegment at 33.1% of the dataset. 20-49GB remains the most offered allowance tier, at 18.9% of dataset plans.
  • Virgin entered the 24-Month PAYM subsegment in April, BT Mobile entered the 18-Month PAYM subsegment in May. BT’s decision means its BT Mobile and EE brands both compete in the 18-Month PAYM subsegment.

Background

Each quarter Pure Pricing interrogates its phone sim-only dataset to analyse how the UK phone sim-only market is evolving over time. This review will look at calendar Q2 2020 with market data as at Tuesday, 30 June 2020.

We have 175 phone sim-only plans tracked in the Pure Pricing dataset as at the 30 June 2020 snapshot, versus 166plans in the Q1 dataset snapshot as at 31 March 2020.

Plans are split amongst 5 market subsegments (30-Day Prepay, 30-Day PAYM, 12-Month PAYM, 18-Month PAYM, 24-Month PAYM) and 8 data tiers 2GB+, 5GB+, 10GB+, 20GB+, 50GB+, 100GB+, unlimited) producing a map of 40 microsegments in which operators and price plans compete.

Operator brands tracked in the dataset include the MNOs, MNO sub-brands and major MVNOs.

The Pure Pricing Quarterly Review tracks the mix of plans offered for sale by operators, not the actual or estimated mix of plans purchased by customers.

For detailed information on our phone sim-only dataset methodology, please see the note at the end of the post.

Q2 2020 Analysis

Let’s get started by looking at subsegment participation by operator brand.

The key developments in participation this quarter are:

  • April: Virgin entered the 24-Month PAYM subsegment
  • May: BT’s BT Mobile brand entered the 18-Month PAYM subsegment in May. BT’s decision to place the BT Mobile brand into the 18-Month PAYM market is noteworthy, as its EE brand was already operating in this subsegment.

Turning now to market plan distribution by subsegment.

Q2 2020 Phone sim-only plan distribution by dataset subsegment:

  • 30-Day Prepay: ⬇️ 25.7% (vs 27.7% Q1 2020, -2.0 pp)
  • 30-Day PAYM: ⬇️ 20.6% (vs 22.3% Q1 2020, -1.7 pp)
  • 12-Month PAYM: ➡️ 33.1% (vs 32.5% Q1 2020, +0.6 pp)
  • 18-Month PAYM: ➡️ 7**.4%** (vs 6.6% Q1 2020, +0.8 pp)
  • 24-Month PAYM: ⬆️ 13.1% (vs 10.8% Q1 2020, +2.3 pp)
  • 12-Months+ share of dataset plans: ⬆️ 53.7% (vs 50.0% Q1 2020, +3.7 pp)
  • Weighted average contract term of dataset plans: ⬆️ 8.9 months (vs 8.2 months in Q1 2020, +0.7 months, +8.9%).

Last quarter the dataset hit a tipping point in terms of contract duration. In Q1 2020, 50% of sim-only plans in the dataset required a 12-Month commitment or longer. This trend continues into Q2 2020, now 53.7% of dataset plans are 12-Month commitment or longer. The combination of 30-Day Prepay and 30-Day PAYM plans now represent the minority of the dataset.

24-Month PAYM plans were the fastest growing subsegment of the dataset in Q2 2020, increasing to 13.1% of the dataset in Q2 2020, up 2.3 pp from Q1 2020. For comparison, 24-Month PAYM plans comprised only 4.7% of the dataset in Q4 2019.

Let’s turn to average plan price per dataset subsegment.

  • 30-Day Prepay: ➡️ £17.31 (vs £17.30 Q1 2020, +0.0%)
  • 30-Day PAYM: ➡️ £18.44 (vs £18.41 Q1 2020, +0.2%)
  • 12-Month PAYM:⬇️ £19.12 (vs £19.44 Q1 2020, -1.6%)
  • 18-Month PAYM: ➡️ £20.77 (vs £20.82 Q1 2020, -0.2%)
  • 24-Month PAYM: ⬇️ £20.08 (vs £21.49 Q1 2020, -6.6%)
  • Average across all plans: ➡️ £18.76 (vs £18.93 Q1 2020, -0.9%)

Average plan prices per subsegment were flat across the board, with the exception of 24-Month PAYM subsegment which saw an average price change of -6.6%. As this subsegment grows, competitive pressure appears to be placing downward pressure on pricing.

Let’s looks at plan distribution by data allowance.

Q2 2020 Phone sim-only plan distribution by data allowance:

  • 1GB – <2GB: ➡️ 6.3% (vs 7.2% Q1 2020, -0.9 pp)
  • 2GB – <5GB: ⬇️ 14.9% (vs 16.9% Q1 2020, -2.0 pp)
  • 5GB – <10GB: ⬆️ 16.0% (vs 14.5% Q1 2020, +1.5 pp)
  • 10GB – <20GB: ➡️ 13.1% (vs 13.3% Q1 2020, -0.1 pp)
  • 20GB – <50GB:➡️ 18.9% (vs 18.1% Q1 2020, +0.8 pp)
  • 50GB – <100GB: ➡️ 7.4% (vs 7.8% Q1 2020, -0.4 pp)
  • 100GB – < Unlimited GB: ⬆️ 8.6% (vs 6.0% Q1 2020, +2.5 pp)
  • Unlimited GB: ➡️ 14.9% (vs 16.3% Q1 2020, -1.3 pp)
  • Plans 50GB+: ➡️ 30.9% (vs 30.1% Q1 2020, +0.7 pp)

The key takeaway here is that data allowance growth, as measured by the proportion of dataset plans offering 50GB+, remains flat at 30.9%. This is an increase of just +0.7 pp from Q1 2020.

We are not seeing evidence of significantly increased customer data demand based on operators’ plan offerings, suggesting that the introduction of 5G into the market is not yet having material impact.

Another useful way to examine the market is to combine the contract length subsegments with the data allowance bands to produce a heat map of the the 40 microsegments in the dataset.

Turning now to operator targeting of the 40 microsegments, we can view a table of the lowest price brand(s) per microsegment to gain insight as to which microsegments each operator brand is focusing its competitive efforts.

And for comparison, the same view as at Q1 2020.

Examining each of the subsegments in turn:

  • 30-Day Prepay: Three continues to deploy its SMARTY sub-brand as a price leader in this subsegment to drive acquisition. Low pricing allows SMARTY to quickly build a prepay base that can be used to drive upsell to the main Three pay-monthly base. SMARTY has repriced its larger bundle plans this quarter to maintain price leadership of the 50GB+, 100GB+ and unlimited data allowance bands.

  • 30-Day PAYM: iD Mobile continues to dominate price leadership in this subsegment. ID appears to have priced too aggressively in the 20GB+ and 50GB+ bands during Q1, and has raised prices for these bands in Q2 without sacrificing price leadership.

  • 12-Month PAYM: This subsegment highly competitive as operator brands continually update pricing to ensure they can win a satisfactory share of the biggest subsegment. All data allowance bands with the exception of unlimited data saw changes to plans securing price leadership in each of the data allowance bands. BT continues to compete aggressively via its BT Mobile brand as a mobile cross-sell to its broadband customers. The impact of the 2X data allowance benefit for its Halo converged customers is especially apparent. O2 retain a strong focus on its hero £20 / 100GB plan with 6 months inclusive Disney+ and inclusive roaming for a number of non-EU international destinations.

  • 18-Month PAYM: Despite this subsegment being the smallest (7.4% of the market), it remains an area of competitive interest. May saw the BT Mobile brand enter the subsegment, with exclusive plans for its standard broadband base, and additional exclusive plans for its Halo premium converged customers. BT’s tactics in this subsegment are not clear, as the BT Mobile offerings compete against its EE brand, which has a long standing presence in this subsegment.

  • 24-Month PAYM: Virgin has been very active in the fastest growing subsegment since its April entry. Virgin aggressively priced plans across data allowances 1GB+ to 20GB+ to secure clear price leadership.

Key findings of Q2 2020 Phone Sim-Only Review

  • Longer contracts are now the norm: Operators have been increasing shifting focus away from 30-Day plans, to the extent that plans requiring commitments of 12-Months and above are now the majority of the market.
  • The rise and rise of 24-Month PAYM: A key driver of the market shift to longer contracts is the growth of the 24-Month PAYM subsegment. 24-Month PAYM plans were the fastest growing market subsegment in Q2 2020, increasing to 13.1% of the market in Q2 2020, up 2.3 pp from Q1 2020. For comparison, 24-Month PAYM plans comprised only 4.7% of the market in Q4 2019. Virgin chose to enter this subsegment in April, adding to subsegment growth and competition.
  • Pricing and allowance levels broadly flat: Despite shifts in subsegment weightings, overall market pricing and allowance levels remain stable. We expect to see shifts in both in the second half of the year as 5G plans and devices begin to capture a more meaningful share of the market.

For questions or follow-up, you can reach us at hello@purepricing.com or on Twitter @PurePricing


Appendix (Dataset Methodology):

Each week Pure Pricing collects sim-only plan data for the following operators:

BT (plans available to broadband customers), BT (plans available to Halo customers), Plusnet (plans available to broadband customers), EE, iD, O2, giffgaff, Tesco Mobile, Sky, Three, SMARTY, Virgin, Vodafone and VOXI. Standalone SIMO plans from BT and Plusnet that don’t require customers to already have a broadband service from these operators have been excluded. Only plans with monthly data allowances of at least 1GB of data are included in the market study. Vodafone unlimited plans with speed restrictions of less than 2Mbps are excluded.

Voice centric phone sim-only plans of less than 1GB allowance are excluded from the data set.

QoQ percentage changes are marked as ➡️ flat unless QoQ movement is ≥1 percentage point + or -)

Additional BT notes:

BT (+BB) = Phone sim-only plans available to standard BT broadband customers

BT (+Halo BB) = Phone sim-only plans available to BT “Halo” premium converged broadband customers

BT (EE) = Phone sim-only plans offered by BT’s EE brand

BT (Plusnet +BB) = Plusnet brand phone sim-only plans available to Plusnet broadband customers

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