Vodafone Sells Used IPhones in U.K. to Build Data Revenue

Vodafone Group Plc (VOD) is offering its U.K. customers discounts on used smartphones for the first time, in a new-year push to increase sales of data and stem service- revenue declines.

The “Nearly New” plan provides savings -- of as much as 155 pounds ($251) off the 405-pound price for an iPhone 4 -- for pay-as-you-go users, as well as cheaper plans for monthly subscribers, who already get reduced handset prices. Other devices include those made by Samsung Electronics Co. (005930) and HTC Corp. (2498) that have been returned by customers for resale.

The world’s second-largest wireless carrier is targeting higher data consumption as Britain’s weak economy drives declines in call revenue. Vodafone’s sales from U.K. phone plans fell 2.1 percent in the six months through September, partially offset by a 5 percent growth in data revenue.

“Nearly New is designed to make it even more affordable for people, especially those who prefer pay-as-you-go services, to get their hands on a smartphone,” Newbury, England-based Vodafone said in a statement today. “It is part of our ambition to get the Internet into the hands of our customers.”

The phones went on sale in stores yesterday and will be available online next week.

Samsung Galaxy

Devices will vary monthly based on what customers return. Samsung’s Galaxy SIII and HTC’s One X are available for contract customers this month, while Apple Inc. (AAPL)’s iPhone 4 and iPhone 3GS are available for pay-as-you-go users. The handsets come with a 12-month warranty for customers without a contract and 24 months for monthly subscribers, Vodafone said.

Vodafone fell 0.03 pence to 157.40 pence in London trading. The stock lost 14 percent in 2012, compared with an 11 percent decline for the 23-company Bloomberg Europe Telecommunication Services Index.

Separately, U.K. telecommunications watchdog Ofcom has started a consultation to explore ways to protect consumers against carriers raising prices during the term of contracts, it said in a statement today. Ofcom said it is considering an option to let people drop out of contracts without a penalty in the event of a price increase.

Telefonica Deal

Ofcom’s suggestions may drive up prices, Vodafone said in an e-mailed statement.

“The regulator’s proposals risk generating significant confusion and potentially increasing the cost of getting a mobile-phone contract for millions of people,” Vodafone said. New customers “could find themselves paying different prices for different services depending on which third party has recently increased its prices.”

Vodafone said it has little control over third parties’ decisions to raise prices. The company cited the example of BT Group Plc’s charges for calls to premium-rate numbers, and said it would have to pass on price changes to consumers.

Vodafone has been working to cut costs in the U.K. In June, the company and Telefonica SA (TEF)’s U.K. unit said they would share network infrastructure to improve coverage and cut the cost of expansion. Vodafone has similar agreements in Spain, Ireland, the Netherlands and Australia.

To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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