MVNO

Virgin Mobile acquires French MVNO rival

Paul Rasmussen — Fri, 16 Oct 2009 12:48:29 -0400

In an effort to become profitable by next year, Virgin Mobile France has agreed to buy the local MVNO operations of Sweden's Tele2 for €56 million. The deal is seen as a significant step for Virgin Mobile France given its objective of moving into profit in 2010 and having more than two million customers.

Tele2 France had close to 430,000 customers at the end of Q2/09 and was reported by its Swedish parent company as having a turnover last year of €120 million, but, more importantly, it dramatically increased its profits from €576,000 in 2008 to €5.2 million for the first half of this year.

While Tele2 has given no explanation for the sale, the company has been steadily reducing its European-wide investments and focusing on its operations in the Nordic regions. Tele2 France would appear to have been positioned for sale following an extensive cost-cutting programme to improve its financial performance.

Virgin Mobile France, which is 48.5 per cent owned by Carphone Warehouse, has not made a profit since the launch of the MVNO claiming that it had been investing in advertising and customer retention programmes which had enabled it to lift its customer base to over one million.

For more on this story:
Financial Times

Become an MVNO within 6 weeks, promises Orange

Paul Rasmussen — Wed, 14 Oct 2009 13:09:50 -0400

As the proposed merger with T-Mobile UK enters some rough water stirred up by the UK Office of Fair Trading worried about competition, Orange UK has unveiled plans for a new revenue stream based around MVNOs. The company has agreed a deal with Transatel--a mobile virtual network aggregator (MVNA), to assist with the launch of multiple MVNOs as quickly and cheaply as possible--all in the space of six weeks.

According to Orange UK's VP of new business wholesale and strategy, Marc Overton, the objective is to increase the company's presence in niches that it does not tap easily with its own brand and service offerings. "Our overarching ambition at Orange is to become the network partner of choice for new and existing MVNOs. This partnership has been driven by market demand, as companies are increasingly realising that offering telecoms services to their customers creates additional profitable growth and increased loyalty."

Overton believes that Transatel--which already operates in France and Belgium--could establish around 20 UK MVNOs a year by persuading SMEs and resellers which already target specialised customer bases to sign-up. An example of this, said Overton, would be MVNOs targeting specific ethnic groups with potential customer numbers between 50,000 and 200,000.

The UK MVNO market has proven successful for some ‘big-brand' firms, such as Tesco and Virgin, but dramatically less so for Blyk and Dot Mobile. The market could become more challenging with rumours that Red Bull is on the verge of launching a pan-European MVNO.

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Rethink Wireless

Operators on wrong page with European Kindle launch

Paul Rasmussen — Wed, 07 Oct 2009 13:33:58 -0400

Mobile operators in Europe remain ‘confused' about their level of involvement with the planned launch of Amazon's Kindle ebook reader. UK operators say they have only just heard about the plans--potentially one of the biggest technology launches of the year--a few days ago and claim not to understand what role, if any, they will be expected to play.

According to Amazon, the 3G device will work in Europe but has not revealed which European operators will support the reader. The available information states that it will work with AT&T's wireless network, which they say has the global reach that Amazon needs for its international plans. The idea is that AT&T will work alongside a number of operator partners in 100 countries around the world.

Interestingly, Amazon's UK wireless coverage map shows an extensive 3G reach in lowland and metropolitan areas, with Edge and even GPRS in upland areas. Something that potential Kindle purchaser's might want to check prior to payment.

The Kindle 2 reader, which will be shipped with US power cords, will sell for €280 and can be pre-ordered now prior to deliveries scheduled to start 19 October.

For more on this story:
Telegraph

Rumour Mill: Is Red Bull on verge of pan-European MVNO Launch?

Paul Rasmussen — Fri, 02 Oct 2009 08:56:56 -0400

The energy drink vendor and F1 team sponsor, Red Bull, would appear to be fully prepared to unveil its MVNO service in Austria within the next few weeks. This move has triggered industry speculation that the company will then launch MVNO services in other European countries, mimicking Virgin Mobile with its exclusive networked SIM deals.

According to Red Bull Mobile's web site, Austrian consumers are to offer two exclusive network tariffs, named simply All and All+, the latter offering 2,000 texts and minutes and up to 2GB of Internet data transfer for €29. However, local observers claim that the most attractive feature of the Red Bull Mobile network appears to be its online Portal. The Portal is branded as the ultimate tool for accessing news, interviews, weather, sports and downloads from the world of Red Bull and beyond.

The initial handset portfolio includes Nokia's N97, 5730 and 5800, Sony Ericsson's C702 and G705, and Red Bull's very own dedicated BH-1 (manufactured by ZTE).

Whether the Red Bull brand--with its considerable marketing muscle, has the weight to break into the already over-crowded European MVNO market will be watched with interest by the cellular industry. While niche MVNOs continue to launch on an almost weekly basis, a pan-European strategy needs a multitude of skills and deep pockets--as seen with the attempt by Blyk to build a European empire.

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PR Fire

UK ripe for mobile network consolidation

Keith Mallinson — Tue, 29 Sep 2009 17:11:31 -0400

The UK is crying out for mobile network operator consolidation. The market is mature and nowhere is as brutally competitive for all participants. In the 3rd and 4th positions out of five, Orange and T-Mobile are desperate to improve their competitive positions and financial performance. The proposed joint venture between these two is attractive on several counts, while plans for control and branding are marred by an indecisive compromise and procrastination. Precedent is unfavorable for FT and DT as JV partners.

Anemic profits with operator EBITDA margin percentages in the low twenties illustrates that the UK mobile operator market is ailing. Even global market leader Vodafone is struggling, despite its economies of scale in purchasing and branding. Pricing power is nonexistent with market shares spread fairly evenly among network operators, including their MVNO-hosted subscribers, and with regulatory controls hammering hitherto lucrative call termination and roaming charges for voice and SMS. In contrast, market average EBITDA margins range from 35-45 percent in France, Spain, USA, Germany and Italy where there are one or two clear market leaders and in most cases fewer competitors.

Intense competition with low prices can be beneficial to consumers in the short term, while damaging in the longer term. Mobile is a capital-intensive business and the sector needs a new round of investment and expansion with the development of the mobile broadband, including new spectrum and equipment. Even deep-pocketed multinationals cannot justify investing and will contemplate leaving national markets if returns are inadequate, as is currently the case in the UK.

But nobody's willing to sell for a price anyone else is currently willing to pay. This is a bit like residential property markets of late. Foreclosures aside, many would-be sellers try to ride out the downturn rather than take a hit with a low price. This explains why 3UK has not been bought, despite being up for sale.

Under these severe financial pressures and constraints, Deutsche Telekom and France Telecom have decided to merge their respective UK businesses into a 50/50 JV. With regulatory approval expected in the first half of 2010, the combined business will become the UK's largest operator with 28.4 million subscribers and a 37 percent market share on the basis of 2008 figures. Unlike Orange and T-Mobile with similar standing, there is no comparable player to 3UK in 5th position. It continues to wait for better days.

Engineering of the financial and orthodox forms is significant in this JV formation, its deconsolidation from corporate accounts and in operations. Upon deal completion, parents' EBITDA margins rise a bit in a trice and the merger synergies worth GBP 3.5billion are promised in reduced annual OPEX and CAPEX of GBP 445 million and GBP 100 million respectively. Costs will be saved in the network with rationalized base station and site figures along with reductions in retail outlets and staff numbers. The structuring for GBP1.25 billion of debt reflects differences in value for the two entities being combined.

The deal is a lot less unacceptable than the humiliating figures of around GBP 3.5 billion that were rumoured to have been offered T-Mobile by Vodafone and O2. The need to do something was serious, but this figure is much less than the GBP 8.4 billion T-Mobile paid to buy the company, formerly called One2One, in 1999, let alone the GBP 4 billion it paid for 3G spectrum plus subsequent network investments. FT paid GBP 26.9 including debt for Orange. The JV is a clever wheeze because it saves face by bringing a solution without the embarrassment of having to recognize such losses in value...Continued

Kindle in Europe: Amazon close to UK MVNO deal

Paul Rasmussen — Fri, 17 Jul 2009 12:24:16 -0400

Having seen success in the US for its Kindle ebook, Amazon is now said to be in final negotiations with a UK mobile operator concerning an MVNO launch. The company is looking to complete the MVNO deal in time to have Kindle working on a W-CDMA-based cellular network in time for the build-up to Christmas.

While the European Kindle device will follow the US model of being able to download publications via the PC and Wi-Fi, Amazon wants the Kindle to have 3G W-CDMA connectivity--as is the case in the US except the device has been designed to use CDMA technology.

The company has failed so far to find a UK operator prepared to host the Kindle's Whispernet connections which make the device so unique in the marketplace. This data-only service supports the download of electronic magazines and books to the Kindle device in a manner that is transparent to the user.

Amazon is understood to have outsourced all aspects of manufacturing for the Kindle in the UK to Qualcomm, including securing cellular connectivity with a mobile operator in the UK. Qualcomm already runs the backend for Whispernet in the US, including handling the billing between Amazon and Sprint.

Operators that can be discounted from these discussions are Vodafone--it has launched its own version of the Kindle in Germany, while Orange is working on an ebook in its domestic French market. However, Amazon has rubbished these offerings by mobile operators claiming that publishers need to be very sure of the benefits before becoming involved. The company maintains it has spent over a decade building these relationships.

For more on this story:
Mobile Today and The Register

Virgin Mobile taunts market with French 3G licence bid

Paul Rasmussen — Thu, 02 Jul 2009 10:17:44 -0400

Maybe we will, maybe we won't, is the message coming from Virgin Mobile France as to whether it will enter the bidding for the fourth French 3G mobile phone licence. The company said it was still in negotiations with various potential partners about making a bid, but admitted the suggested price for the licence of €240 million "seemed fair and relevant."

Interestingly, the company's secretary general, Philippe Maugest, seemed to drop a heavy hint that network sharing was key to any decision about making an offer for the 3G licence. "A new entrant must have the opportunity to deploy a new mobile network under economically viable terms," was how Maugest described the matter.

Given that the French regulator ARCEP is expected to award the licence in January 2010, the interested bidders must decide on any partnership within the next few months.

Virgin Mobile confirmed it is in talks with the cable operator Numericable--which already operates as an MVNO in France--and competes with Iliad in the provision of broadband, television, and fixed-line phone services. Iliad is the only firm to have officially lodged an interest in bidding for the 3G licence.

Numericable failed to clarify the situation by confirming it was considering several bidding options for the 3G licence, and that an alliance with Virgin Mobile was one possibility under review.

The existing 3G operators--Orange, SFR and Bouygues Telecom--who paid €619 million in 2001 and 2002 for their 3G frequencies, have made plain their objections to the much reduced price for this fourth licence, and are keen to delay or halt the arrival of a fourth player.

For more on this story:
Reuters and WSJ

Belgium looks to raise 40m euros from fourth mobile licence

Paul Rasmussen — Wed, 01 Apr 2009 13:36:57 -0400

Regardless of the economic woes, the Belgium government has decided to invite tenders for a fourth cell phone licence in an effort to spur greater competition in the market. A public consultation will need to begin followed by the legislation being updated; however, the successful bidder could, if all goes well, acquire the licence later this year and start operations sometime in 2010.

Several names have been put forward as potential bidders, including the Flanders-based cable operator Telenet, along with Voo, Telenet's counterpart in the French-speaking Wallonia region. Both firms already have MVNO agreements in their respective areas of operation. They could make individual bids for the new licence, or consider a joint submission. However the existing operators--Belgacom unit Proximus, France Telecom's Mobistar and Dutch group KPN's Base--are banned from becoming involved.

Additionally, the Belgium Economy Ministry plans to auction a range of frequencies for both GSM and UMTS services before the end of the year; 5MHz of spectrum in the 2.1GHz range, suitable for 3G services, and a further 5MHz in the 900MHz GSM band are to be made available.

For more on this story:
Total Telecom and Telegeography

MVNO strategies to survive the economic downturn

Paul Rasmussen — Wed, 11 Mar 2009 14:02:12 -0400

Despite the economic downturn, there are still exciting new markets for MVNOs to enter, as well as new types of players looking to launch services. For those competing in saturated markets, the low-cost MVNO structure will help them survive and there is the potential to grow as consumers look for new ways to reduce their mobile costs. Success is most likely for those MVNOs that have targeted offerings for specific market segments. In addition there is the growth of data-focused MVNOs, but the challenge for them is how to differentiate from their host providers. Article

Rumour Mill: Nokia and Ericsson to become Indian MVNOs

Paul Rasmussen — Wed, 04 Mar 2009 12:59:04 -0500

We live in unusual times, but to hear that Nokia and Ericsson have shown interest, apparently, in becoming MVNOs in the Indian market is more than extraordinary.

According to officials within the Indian Department of Telecommunications (DoT), the two European-based manufacturers are among several other foreign companies interested in becoming involved as mobile service providers. One source claimed Nokia was in talks with NTT DoCoMo to enable the handset maker to become an MVNO in India, while Ericsson had meet with DoT executives to brief them on its MVNO plans.

Other firms that have shown interest in starting MVNO services in India include Telekom Malaysia, Mobile ESPN, BT and ValueFirst. BT, Verizon and France Telecom were among the companies that earlier had asked the Indian telecoms regulator (Trai) to open this business segment to outside investors.

However, a new report from Ovum cautions new entrants, pointing to the fact that mobile adoption is now widespread in India's cities and towns and will present a difficult target for those new to the market. It advises MVNOs to segment the market and go after the under-served. "One lucrative example is to target the wealthy segment by offering concierge services--a strategy employed by Dutch MVNO Baron," said Charice Wang of Ovum. "Another potential segment is to target customers that make low-cost international calls, such as those that have family abroad--Lycatel and Lebara have successfully employed such a strategy in Europe."

A further possible hurdle for MVNOs is the upcoming 3G licence auction, which could take place later this month. MVNOs need to make sure they choose the right partners that can allow them to offer the best range of services for their targeted segment.

For more on this story:
Financial Chronicle