Tesco Mobile reports a £449,000 pre-tax loss for 2023, a shift from the previous year’s profit.
- Revenue has risen to over £1 billion, driven by strong sales of high-end handsets.
- Despite overall customer growth, the prepaid customer base has decreased significantly.
- Efforts to innovate and attract customers are underway, capitalising on Tesco’s retail presence.
- A major systems transformation project was completed, enhancing service efficiency.
Tesco Mobile, a joint venture between Tesco and Virgin Media O2, declared a concerning financial performance for the fiscal year 2023, reporting a pre-tax loss of £449,000 compared to a profit of £8.3 million in 2022. Despite this downturn, the company’s revenue exceeded £1 billion, up from £969.5 million, primarily fuelled by an upsurge in high-end handset sales.
The group has identified market pressures and evolving customer behaviours as key challenges affecting its operations. While the total customer base increased to 5.51 million in 2023 from 5.43 million in the previous year, the prepaid segment saw a notable decline of 9.4% to 1.50 million users.
Simultaneously, the number of contract customers rose by 6.2% to 4.01 million, indicating a shift in consumer preference towards contract plans. This transformation in customer dynamics is being addressed through strategic initiatives aimed at launching innovative products and competitive tariffs, leveraging Tesco’s supermarket platform to enhance market presence.
In addition, Tesco Mobile has successfully completed a major system transformation programme, migrating postpay customers to a new provisioning and charging platform. This effort is expected to streamline operations and improve customer service, ensuring the venture remains competitive in a highly challenging telecommunications market.
The partnership between Tesco and Virgin Media O2, renewed for another ten years in early 2024, underscores the companies’ commitment to this joint venture, a relationship established in 2003 and formalised as a 50:50 partnership in 2017.
Despite significant sales achievements, Tesco Mobile must navigate competitive pressures and changing consumer behaviours to ensure future profitability.
