Research Notes

E-Plus results – outlook for Germany & the mobile industry

When you as we do in Strand Consult, make our living of delivering Strategic information to mobile operators world-wide, it is always a pleasure to see the recommendations that you make in ones strategic reports are fulfilled as operators choose to change strategy and that this strategy change leads to the companies and not least their shareholders benefits from the strategy.

In Germany the KPN owned E-Plus have just published their Q2 results. The base was E-plus market share of one year ago of 14,5%, EBITDA margin of 37%. Looking further back at E-plus they were an operator which fought a good fight but they never gained the upper hand, market shares and the KPI’s never changed. To put it frankly E-plus was a part of KPN that did not contribute much more than being a name of the associated companies.

When we in 2004 produced our first edition of our report” “The Moment Of Truth – A Portrait Of The Discount Mobile Service Providers Success” we choose to publish the following analysis on the 9th of March 2004, an analysis which fitted an Operator like E-plus perfectly:  The smaller mobile operators need to reorganize

In the spring of 2005 Stan Miller changed E-plus’s strategy and bet on that a large part of their customers from now on should come in the hands of MVNO’s who targeted different segments in the market, new players like, medion mobile,,, Ay Yildiz and many more brands appeared.

E-Plus new strategy have been a huge success, and created a turnaround we have not seen in many countries. We are actually pondering which other operators have done the same.

The fact that E-plus would succeed with their new strategy comes as no surprise to us, as we in our best selling report Mega Trends in the mobile industry – a question of life or death, have described the challenges mobile operators face, and what we believe should be done to reach success in the future mobile market.

The 14th of December 2005 we predicted the development that is now taking place in Germany in the article: Paradigm shift in the German Mobile industry

That we again were right in our assumptions and recommendations in our reports were not a surprise, however the speed at which E-plus make things happen was. In 12 months E-plus went from an EBITDA margin of 22% to 37%, their revenue in Q2 2005 was – 10 million EURO has now grown to 101 million EURO in Q2 2006, their SAC has fallen with 56% and today they get +35% of all gross adds in Germany  in a market where they have a 14% market share. What the future looks like for E-plus we can only guess, but it would not come as a surprise for us if they hit an EBITDA margin of 40-45% and their success will force their primary competitors Vodafone and T-Mobile to conduct massive savings rounds to keep up their revenues.

Looking at a country like Sweden Tele2 has had the same success with their concept of cheap voice minutes and a low cost strategy. The success can best be described by the fact that Vodafone quit Sweden and downgraded the value of their investments with 500 million Pound Sterling.

The fact that the industry is facing a paradigm shift nobody can doubt. Germany and E-plus is living proof of this. To us the future is simple, the report, How MVNO´s can get success in the Mobile Broadband market

This report is a unique collection of knowledge and can save you a great deal of time and ensure that you increase your possibilities of being successful on this market. With this report you will have access to 95% of the knowledge a market player focusing on MVNOs and their role on the mobile broadband market needs.

The MVNO market is changing and with the introduction of mobile broadband a number of existing MVNOs are facing two choices – should they market and sell mobile broadband and if they do, which strategy will make them successful?
How MVNO´s can get success in the Mobile Broadband market

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