UK Post Office plans MVNO on EE's network

The UK's Post Office, a retailer of mail, financial and fixed-line services, is planning to enter the wireless market as a mobile virtual network operator (MVNO) after reaching a wholesale agreement with network operator EE.

The Post Office said it intends to launch the service in the autumn, and that customers will initially be able to subscribe in 50 of its branches across the UK, online, or by phone. The plan to launch an MVNO is part of a broader strategy that has already seen the Post Office launch home phone and broadband services. The company said the business already has almost half a million customers.

"Our research tells us that people are seeking greater value, with one in three of those surveyed saying they intended to move away from one of the mainstream providers for their next service. We believe we are in an ideal position to offer a genuine alternative with over a third (36 per cent) also saying they would consider us as their mobile provider," said Martin George, chief commercial officer at the Post Office.

The company, which has just undergone a major transformation process following a £640 million (€805 million/$1 billion) investment from the government last year, is joining an already crowded market with some strong competitors. EE, the future host of the Post Office service, competes with Vodafone, O2 UK and 3 UK on the networks side, while numerous MVNOs including Virgin Mobile, Tesco Mobile and other high-street names also operate on the UK mobile market.

The Post Office said its strategy will be to offer "transparency" and great value for money to challenge the established providers.

The company will certainly benefit from having a strong and trusted brand, but a recent report by FierceWireless:Europe highlighted that competing only on price can be a difficult game to play on the MVNO market. Brand is important, as demonstrated by the many supermarkets that have entered the mobile market, but so, increasingly, are a differentiated service and a target market.

"If you are only in the margin business you will be squeezed out," Ilkka Aura, chief commercial officer at IT solutions provider Tecnotree, told us. "Often the margin for MVNOs is brutally low."

The Post Office certainly has a regular and defined customer base that uses its services, but it remains to be seen how it will formulate its strategy to take mobile customers from the more established network operators.

It is also not the only postal service in Europe to enter the mobile market: other examples include La Poste in France and Poste Italiane in Italy.

For more:
- see this Post Office release

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