Busy ethnic market remains growth area, as Vodafone dismisses competitors
Vodafone said last week 70-80 per cent of the ethnic international calling market remains available to mobile network operators as the migration from prepay calling cards continues.
Vodafone estimates the UK international calling market to be worth £500 million per year in retail revenues, but other market estimates put it at closer £1.2 billion, excluding around £350 million of additional revenue from local calls and text messages.
Vodafone stepped up its fight for share of the ‘ethnic’ market in the UK last week with announcement of a new aggregator deal with Cognatel, a subsidiary of Digitalk, itself a technology platform provider to fixed line companies. Cognatel is working with Vodafone as a mobile virtual network aggregator (MVNA), running a platform for swift and inexpensive set-up of MVNOs.
In parallel, O2 UK redoubled its belated efforts to capture share of the ethnic market by expanding its MVNO relationship with Lycamobile to cover aggregator activity, and to bring on Nomi Mobile (see below). Lycamobile has migrated huge numbers of prepay customers from Orange to O2 in recent months. Nomi Mobile was one of the first MVNOs to attack the ethnic market. It piggybacked originally on the Vodafone network, via BT’s wholesale contract with the operator.
Cognatel was swift last week to launch a new MVNO with international calling card brand iCard, iCard Mobile. It said it is in discussions with two more for MVNO launches, and will focus on the ethnic market, as well as niche consumer sectors.
Vodafone already works with MVNO Lebara Mobile in the space, and has just set up with Desi Mobi to address the Bangladeshi community also.
Vodafone UK director of business development and wholesale Tim Stone (pictured, left) observed the increased MVNO competition within the ethnic space, but said: “It is not saturated. That is wrong. The ethnic market is still almost entirely on fixed. We think it is worth something like £500 million. When you bring customers across, and the keep their SIM in their handfset for local and national calls also, then it is in effect a much bigger market. I would suggest only 20-30 per cent of the market has moved across to mobile. There is a massive opportunity. Yes, there is a lot of activity, but competition is important for that migration.”
Stone said Vodafone is number one for revenue market share in UK wholsale, even outrunning Everything Everywhere, which counts Virgin Mobile among its customers. Vodafone has Lebara Mobile, BT Mobile, Asda Mobile, Talkmobile, TalkTalk, Truphone and Desi Mobi as MVNOs, TomTom and Centrica as wholesale partners, and Teleena and, now, Cognatel as MVNAs. It claims around 35 per cent of the UK wholesale market, although it refuses to put a precise figure on it. “We believe we are the leader by revenue market share [we think we are number one],” said Stone.
He suggested rival operators have paid lip service to its wholesale partner model, without matching its success. Stone leads a standalone unit in Newbury, made integral to Vodafone UK for incremental revenue under the stewardship of former UK chief Nick Read in 2007, and under present chief Guy Laurence now.
Since, Orange has rethought its wholsale and new business strategy under UK chief Tom Alexander. Orange wholesale boss Marc Overton remarked in these pages launch of its Transatel MVNA of its ‘partnership approach’. But Stone claims Vodafone is orignal author of the strategy, and sets the benchmark for choosing the right partners and offering the best support to new ventures.
Stone said: “The difference comes in the way you operate in partnership. And it is easy [for other operators] to say such things, but it is very difficult to carry through with them. When you get it absolutely right, then it can be successful; otherwise it is just words.”
Cognatel chief executive Mark Ashdown (pictured, right) said Cognatel is distinguished among MVNAs for its superior, flexible and real-time billing platform and CRM solutions. Ashdown said it can launch MVNOs off its platform in eight weeks at a fraction of the cost of full-blown MVNOs.
He remarked: “Our billing and CRM solutions cannot be matched. That is the differentiator. But, like Vodafone, we will not work with just anyone. We want to work with start-ups in the space, and those that wish to diversify into it, and we want to build business with them. We are not about taking a set-up fee and then leaving partners to sink or swim. We are in the business of making customers successful.”
Vodafone already works with MVNA Teleena. Everything Everywhere works with MVNA Transatel, meanwhile, and Three works with X-Mobility.