Operators focus on getting the balance right with mobile sub-brands

It is the season of first-quarter results, with operators all over Europe coming out of quiet periods and revealing poorer or better results than expected.

Telefonica looks to be among those operators with the more disappointing results, in part because of currency effects in Latin American countries. Bloomberg noted that the Spain-based operator reported its lowest quarterly revenue since 2005 after sales fell 6.6 per cent in reported terms to €10.78 billion ($12.3 billion), although organic growth was 3.4 per cent. Orange meanwhile reported its third successive quarter of revenue growth, with a small rise of 0.6 per cent to over €10 billion.

Interestingly, both operators benefited from an improvement in Spain, which has experienced a pretty torrid time in recent years because of the country's deep and long-lasting recession. However, Telefonica was able to increase revenue there for the first time since 2008, while Orange also returned to growth with a 1.8 per cent rise in revenue. Both companies benefited from moves to raise prices after years of aggressive price cuts.

It was also interesting to note that Orange held up reasonably well in France in the face of strong promotional activity from rivals. One development picked out by analysts from Jefferies International was that, although Orange faced pressure in the mid-market segment, it managed to retain many of these users through its Sosh sub- or secondary brand. In fact Jefferies said that of the 84,000 net additions at Sosh, 79,000 came from Orange.

Indeed, mobile operators have been using these alternative brands for years, and their effectiveness in picking up disaffected users of the main brand is clearly reflected by Sosh's success. The key lies in not allowing the secondary brand to become a mirror image of the parent brand, but instead using it to market to different audiences that may be looking for something different.

Both Sosh and Red by SFR, which has recently been relaunched as a much more distinctive secondary offering, also offer multi-play plans with ADSL or fibre, but essentially these product lines aim to appeal to those who want no tie-in periods and a cheaper price plan. Bouygues Telecom, on the other hand, brought the B&YOU secondary brand into its main portfolio and has now lost the distinctiveness that this lower cost brand previously provided.

In this competitive market, having more than one feather to their bows appears increasingly to be a requirement for Europe's mobile operators, but finding the right balance between secondary and parent brands is clearly far from an easy task. In Germany, for example, Telefonica Deutschland has decided to transfer E-Plus and BASE customers to its O2 offerings, but it has indicated that there will still be a role for BASE in future as an online brand. How it will utilise the different brands it has inherited from E-Plus remains to be seen.--Anne

P.S. In observance of the public holiday next week, FierceWireless:Europe will not publish on Monday, May 2. We'll be back in your inbox on Wednesday, May 4.

Suggested Articles

Sprint said it will offer discounted service to customers age 55 and above.

Unlimited data plans placed a strain on carrier networks last year, but according to OpenSignal the carriers met the challenge.

Verizon plans to bring 5G to four U.S. cities this year and hopes to have standards-based equipment in place for some of those deployments.