Denmark’s mobile market has undergone a dramatic transformation over the past 18 months as subscribers have abandoned the incumbent operators and flocked to the cheaper service offerings of the nation’s growing band of mobile virtual network operators (MVNOs). According to figures released by the country’s regulator, the National IT and Telecoms Agency (NITA, known locally as Telestyrelsen), during 2003 the number of mobile subscriptions nationwide rose by just under 7% to 4.785 million, with penetration increasing to around 90%. However, during the same period the collective customer base of the nation’s five incumbent cellcos – TDC Mobil, Sonofon, Orange, Telia Danmark and newcomer Hi3G – actually fell by 2.4% to 3.69 million. By way of contrast, the three main Danish MVNOs – Telmore, debitel and CBB Mobil – saw their combined subscriber base rise by a staggering 74% from 558,000 to 973,000.
Faced with falling revenues and subscription levels, the incumbents have been forced into a price war, the result of which has seen the average cost of a mobile voice minute fall from EUR0.17 to EUR0.09 in the last six months of 2003 alone. However, with the advent of UMTS services just around the corner, the sector’s real heavyweights – TDC and the Telenor-backed Sonofon – have looked at other remedies to inject much-needed growth into their operations, including the outright purchase of the competition. Dominant player TDC, which controls around half of the market, made the first move in January by acquiring Demark’s leading online mobile reseller Telmore. The group had purchased 20% of Telmore in April 2003 and at the same time negotiated first refusal on the remaining 80%. It paid DKK299 million for the remaining shares, taking over the reseller’s customers and 70 employees. Telmore has long been the biggest threat to the market’s more established cellcos. With a small workforce and online distribution outlets, Telmore has far lower overheads than the established operators and offers basic pre-pay packages without subsidised handsets or contract tie-ins on the assumption that voice calls and low prices are the driving force behind signing up users. The theory is borne out by Telmore’s rapid growth – it had just 130,000 customers at mid-2002, but by the time of its takeover this had swelled to 460,000.
CBB Mobil, the country’s third largest MVNO with 191,639 customers at the end of 2003, is also the subject of interest for the larger companies after putting itself up for sale at the end of January 2004. Whilst it refused to name possible buyers, industry sources have named Virgin Mobile and Telenor as potential suitors, and estimated the operator to be worth in the region of DKK200 million.