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:
Virgin Mobile taunts market with French 3G licence bid
Rumour Mill: Is Red Bull on verge of pan-European MVNO Launch?
Sprint acquiring Virgin Mobile USA for $483 million
Virgin's French MVNO operation on track