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Virgin name spreads to Canada

17 Feb 2005

Richard Branson’s Virgin Mobile has announced that it will launch wireless services in Canada next month, taking its portfolio of operating countries to four – the US, the UK and Australia being the other three. The cellco plans to challenge the country’s existing national mobile operators – TELUS Mobility, Bell Mobility and Rogers Wireless – which it has termed the ‘boring big boys’, by targeting the youth market and focusing on pre-paid services. The market is also home to three regional players – Aliant, SaskTel and Manitoba Telecom Services (MTS). Virgin, which is a joint venture between Virgin Group and Bell Canada, will launch an MVNO service over Bell Mobility’s 1xRTT network, under the company name Virgin Mobile Canada LLC. It claims that its marketing plans will shake up the sector, and expects the country’s existing operators to review their own strategies for the 13-30 year-old segment after seeing what it has to offer. Virgin regards the Canadian mobile market as having high potential for growth, with wireless penetration standing at around 46% at 3Q 2004. Expectations are that by 2007 the penetration rate will increase to almost 60%, with much of the growth likely to come from the low end pre-paid segment. As it stands the percentage of pre-paid customers is relatively low (ranging from TELUS’s 17.5% to Microcell’s 45.7%), making that area a high priority for Virgin.

Rogers became the largest operator in Canada when it acquired the country’s former fourth national player Microcell for CAD1.4 billion in November 2004; the merger gave the operator a combined customer base of almost 5.3 million (at September 2004), knocking the former market leader Bell Mobility from the number one spot. The union of Rogers and Microcell makes sense; they both operate on GSM platforms (the only two in the Canadian market) and can therefore take advantage of the obvious synergies. Rogers also wants to leverage on Microcell’s niche in the teenage and young adult segment, giving it plenty of room to achieve growth, an idea made even more attractive by the entrance of Virgin next month. With competition between the major cellcos heating up, players are likely to begin rolling out additional infrastructure to fill gaps in coverage, as well as put a greater emphasis on next-generation services.

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