Orange MVNOs to shape SME sales


Orange has suggested its new MVNO model, allowing SME resellers to provide branded and bespoke mobile packages to business customers, will change the indirect sales channel and afford resellers a way to survive and grow.

Orange this month confirmed mobile virtual network operator (MVNO) contracts with fixed line providers Unicom and Axis Telecom, as well as with niche operative Catalyst, which works with students and ethnic minorities.

All deals were signed by Orange mobile virtual network aggregator (MVNA) Transatel, with which Orange enables swift establishment of small MVNO projects on its network. All three SIM-only propositions are expected to launch shortly.

The aggregation model allows reseller businesses to set up as MVNOs with investment of just £50,000-£100,000 and to break even with only 500-1,000 subscribers, instead of investment of £5 million and a profitability benchmark of 200,000 subscribers as required with direct network MVNO arrangements.

Orange UK vice president of wholesale, business development and partnerships Marc Overton told Mobile News the Unicom model in particular should be considered by the indirect sales channel as an opportunity to sell mobile airtime tailored according to reseller and client needs.

He pointed out both third-party mobile and fixed line sales channels are under huge pressure, and that sustainable MVNO projects of the type Transatel enables can bring them closer to customers.

Said Overton: “If the reseller market does not create a more intimate offering, and does not take control and offer the local NHS or hotel chain or law firm a fuller and more integrated mobile solution, then someone else will. It is about choice. On one side, you can have a direct relationship with Orange and resell Orange airtime. Resellers know the model; it’s out there. But this allows a more intimate service.

“Do I think it is going to change the face of that [indirect] channel immediately? No, I don’t. However, given the fact the mobile phone will increasingly challenge the ways businesses work going forward, then I can see this sort of solution becoming more prevalent.

“There are some challenging economics in that reseller environment. These guys are struggling. Will this accelerate it? No, I think it is just the natural next step. I think it is an opportunity; it shouldn’t be a threat to them at all.

“You have to wonder how indirect channels can support reselling airtime. At these prices, at this competitive intensity, to this market? There must be a different way to do things. There is an opportunity here, and I think broader minded people in the space realise it.”

At the same time, Overton warned: “For me, it is another opportunity for the channel. It’s a choice thing. But we shouldn’t underestimate that, psychologically, this dealer or reseller business is required to run its own mobile operation with this MVNO solution. It’s not something you do lightly, even if it is something that is easier this way and doesn’t cost as much. But it is still a commitment, and there is still risk involved.”

Orange has been approached by more than 70 companies sinnce the Transatel MVNA contract was announced in October last year. Transatel expects to have signed 20 MVNO partners to Orange by the end of 2010. Overton remarked: “The assumption is we can get 20 by year-end, and 20 of these together would be the equivalent in traffic terms of a medium-sized MVNO.”

Transatel chief executive Jacques Bonifay said the reseller market in the UK is more diverse and fragmented than in France, Transatel’s home market, where fixed line sales in particular are dominated by Orange parent France Telecom.

Bonifay said: “In France, we have launched with 20 providers targeting the SME market. So in France, this market is developing nicely. But in the UK, the SME market of fixed providers targeting SMEs is much, much bigger. The UK is much more open, so I expect much better results – there are several businesses of similar profile to Unicom in the UK, for instance, and hardly any of that scale in France.”

The Transatel MVNA platform allows reseller businesses to select from a range of service and application options to create a bespoke mobile proposition they can brand and sell to their particular customer segment.

Unicom has a base of 80,000 fixed line business customers. Axis Telecom has a base of 14,000 in the Hull area. Both resellers will in the first instance cross-sell branded SIM-only offers into their own bases, and provide billing for fixed and mobile services on the same invoice. The cross-selling activity will minimise marketing and distribution costs to them and hence break-even for the ventures.

Transatel has former Lebara Mobile UK country manager Rob Gaskin and former Orange head of MVNO sales Michael Hunt on the ground in the UK, talking to reseller business in the fixed line space in particular.

“If Orange walked into these companies to discuss an MVNO, they would think we were mad. This is a more personalised and appropriate conversation. The Transatel team speaks the language of the SME market.”

Deployment is quick also; six weeks for a Transatel MVNO, compared with five months for ethnic market MVNO Lycamobile in the UK, which is the fastest direct MVNO set-up in France Telecom’s history.

Overton said: “The economics are a consideration because reselling fixed broadband services, PBXs and all that sort of stuff is challenging in terms of payback and lifetime of kit.

“A lot of people are switching to mobile, and just reselling Orange, or Vodafone, or O2 is not sufficient. People want a unified customer experience, be it around service or billing. And they also want applications that are specific to them on their handsets. They want a complete solution.”

He added: “I don’t want my customers to compete only on price, but to be able to provide a unique service to customers to guarantee longterm survival.”