Shorter term contracts have doubled from 11% to 22%, according to GfK

Sales of 12 month Sim-only deals are rocketing, according to analyst firm GfK. Latest figures from GfK’s retail and technology division show that take up of 12 month Sim-only contracts doubled from 11% to 22% between January and May this year.
GfK senior account manager Cedric Mertes said: ‘When we looked at the contract Sim segment, we saw amazing growth of the 12 months area – 11% in Jan to 22% in May – which shows that customers are obviously keen to commit for a shorter period of time.’
Mertes said the figures indicate that 12 month Sim-only contracts are attracting consumers who are happy to keep their existing phones rather than migrate at the end of their contracts to the latest handsets.
The rise is also partly due to operators attempting to retain customers who are reluctant to sign up to 24 month contracts, said Mertes.
‘Operators are pushing 24 month contracts as they look to keep customers on their networks for longer, but at the same time they don’t want to lose those customers who don’t want to be tied in for that long, or who aren’t as interested in the new handsets. So a lot of operators are now offering 12 month Sim-only deals.’
Mertes said iPhone users could also be driving the rise in the 12 month deals.
‘It is possible that operators have launched some 12 month Sim-only deals for iPhone users coming to the end of their 18 month contract who are happy to carry on using the model they have.’
Neil Mawston, analyst at Strategy Analytics, said he expects the rise in Sim-only deals to slow down.
‘Sim-only deals have been growing in the past couple of years. For operators they mean lower acquisition costs and subsidies but as they also increase the potential for churn, Sim-only can be a double edged sword.
However, I think it is coming close to its peak – there is only so much of the market that is going to take on these deals and then you will see operators encouraging their Sim-only customers onto 18 and 24 month deals – it’s cyclical.’

[Source]