MVNO Monday: a guide to the week’s virtual operator developments

15 May 2017

UK-based MVNO giant Lycamobile Group has confirmed that it has applied for a pan-Indian MVNO licence, which it expects to receive before the end of 2017. The development was confirmed to Hindu Business Line reporters on the sidelines of the launch event for LycaHealth’s Westminster Healthcare service in Chennai. Allirajah Subaskaran, chairman and founder of Lycamobile Group, confirmed that the MVNO is in talks with ‘major telecom providers’ as it seeks to sign a wholesale agreement. As previously reported by TeleGeography’s MVNO Monday, in June 2016 the Indian Department of Telecommunications (DoT) paved the way for the introduction of MVNOs by officially authorising Unified Licence Virtual Network Operators (UL VNOs). A whole raft of tiered concessions are available, although a full unified licence is priced INR75 million (USD1.12 million), encompassing mobile, internet access, fixed line and VSAT access. All applicants must be Indian companies, registered under the Indian Companies Act of 2013, while the ‘total composite foreign holding’ must be in line with the government’s foreign direct investment policy.

The German MVNO segment is set to witness fresh consolidation, with United Internet and Drillisch entering into an agreement to merge the former’s fixed line and MVNO business, which is bundled in 1&1 Telecommunication, with the latter’s MVNO business. Following the successful implementation of two capital increases, United Internet will be Drillisch’s new majority shareholder with a share of around 72.7%, although Drillisch is to remain an independent listed company. Subject to merger control approval, the entire transaction is expected to be completed at the end of 2017. The move is aimed at creating a strong fourth player in the German telecoms market alongside the three major full-service providers Telekom Deutschland, Vodafone Germany and Telefonica Deutschland.

In related news, Drillisch has reported that its total MVNO subscriber base reached 3.548 million at 31 March 2017, up from 2.712 million one year earlier. Of the most recent figure, 3.068 million are said to be ‘budget’ customers, and the remainder are classified as ‘volume’ subscribers. Quarterly revenue dropped from EUR173.4 million (USD189.5 million) in 1Q16 to EUR152.9 million in the first quarter of 2017.

Sticking with Western Europe, UK full-service telco TalkTalk has scrapped plans to build its own UK mobile network utilising home hotspots, in favour of maintaining its current MVNO agreement with O2 UK. A note in the company’s report for the year ended 31 March 2017, explains: ‘As part of the review the group reassessed its mobile strategy and how we allocate capital. The group has therefore decided not to pursue an inside-out mobile network strategy and instead to work with our partners on an alternative distribution strategy’. As a result, TalkTalk is taking a GBP49 million (USD63 million) impairment charge relating to equipment that has no further economic benefit to the group. TalkTalk ended 31 March 2017 with a total of 913,000 mobile subscribers.

Also in the UK, Tesco Mobile, the UK’s largest MVNO by subscribers, has confirmed that its user base reached 4.8 million at the end of FY16/17, up 4.4% on an annualised basis, from 4.6 million. According to the supermarket group’s recent results presentation, the Tesco Mobile service is now available in 462 stores. The MVNO is a 50/50 joint venture with its host network, O2 UK.

LOWI, the no-frills sub-brand affiliated to Vodafone Spain, is poised to introduce a new cut-price service bundling mobile access with fibre-to-the-home (FTTH) connectivity. According to a blog post, the service will be available through online-only channels, and cost just EUR37 per month. The decision has reportedly been influenced by the traction rival MASMOVIL Telecom has gained with its cut-price multi-play synergies. LOWI launched as an MVNO in December 2014, and now claims more than 200,000 subscribers.

Over in the US, cable giants Comcast and Charter have signed an agreement to explore potential opportunities for ‘operational cooperation’ in their respective wireless businesses to accelerate and enhance each company’s ability to participate in the national wireless marketplace. The companies, which have each separately activated an MVNO reseller agreement with Verizon Wireless, have agreed to explore working together in a number of potential operational areas in the wireless space, including: creating common operating platforms; technical standards development and harmonisation; device forward and reverse logistics; and emerging wireless technology platforms. Additionally, the companies have agreed to ‘work only together with respect to national mobile network operators, through potential commercial arrangements, including MVNOs and other material transactions in the wireless industry, for a period of one year’.

The tie-up has prompted Altice USA – which comprises Suddenlink and Cablevision – to share some thoughts on its own US MVNO ambitions. In a 1Q17 earnings conference call with reporters, CEO Dexter Goei said the Comcast-Charter deal was ‘smart’, adding: ‘We’ve been very public about saying that we are going to take our time to see what type of wireless offering we want to do and what type of form it will take … We are very much in line with our cable brethren here in terms of taking our time to evaluate what our options are on wireless.’

Also in the US, Sprint has informed Fierce Wireless that it has terminated its plan to merge its Assurance Wireless brand with i-wireless’ Access Wireless business, in a move that would have merged two notable participants in the government-subsidised ‘Lifeline’ scheme. The statement noted: ‘Sprint and i-wireless made the mutual decision to terminate the joint venture agreement and will instead continue to operate as stand-alone Lifeline service providers. Moving forward, i-wireless will continue to operate as a Sprint MVNO.’

Elsewhere in North America, Sugar Mobile, the national MVNO launched by Ice Wireless, a facilities-based MNO that serves rural and remote areas of Canada, confirmed on 19 April that customers will no longer be free to roam on the Rogers Communications network, unless they have a residential or business address within Ice Wireless’ operating territory. The decision was handed down on 1 March, by the Canadian Radio-television and Telecommunications Commission (CRTC), effectively terminating what critics referred to as a ‘backdoor entry model’. Technically, Sugar Mobile relied on Ice Wireless’ network infrastructure, but since Ice only operates in northern Quebec, Yukon, Northwest Territories and Nunavut, Sugar Mobile subscribers use a Rogers-heavy roaming network negotiated by Ice whenever they leave their home network. Samer Bishay, CEO, commented: ‘We can’t say we’re happy with how this went down. We fought hard for a different outcome, but in the end, the decision didn’t go our way. Mostly we regret what this means for our customers and the future of mobile in Canada.’

In announcing its financial results for the fiscal year ended 31 March 2017, Japanese mobile operator KDDI has confirmed that the number of subscribers claimed by its three MVNO subsidiaries – UQ Mobile, J:Com, and Biglobe (acquired in December 2016) – has reached 874,000, up from 357,000 (December 2016) and 106,000 (March 2016).

Finally, Brazilian mobile virtual network enabler/aggregator (MVNE/A) Surf Telecom has tapped UK-based Spirent Communications for its Tweakker line of device intelligence solutions. According to a vendor press release, Surf Telecom will use the Tweakker access point name (APN) automatic setup solution to get new subscribers onboard its network in ‘a handful of seconds’.

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