Research Notes

easyMobile – The Inside story

A new partnership in the mobile sector has seen the light of day
– easyGroup and TDC/Telmore have together created the newest player on the British mobile market.

Shortly after Virgin Mobile completed their IPO and in a time where many are talking about MVNO’s and what has been happening on the Danish mobile market, the founder of Easy Jet Stelios Haji-Ioannou has entered into an agreement with the Danish Telecommunications Company TDC to form a British copy of the very successful Danish discount mobile service provider Telmore.

And the name of this new company is EasyMobile.

Back in 2001, two MVNO’s established themselves in Denmark – CBB and Telmore – both in many ways changing the way that the traditional MVNO’s – up until then – had been operating. Their concept was a mobile product that is somewhere in between a prepaid and post-paid subscription – with no traditional distribution channels and only a website to market and sell

They basically only sold SIM cards and customers bought and paid for their mobile minutes and SMS messages online at Payments were made via credit card or bank account and customers can only use the available minutes on his account.

The results were tremendous! In just 3 years Telmore acquired nearly 500.000 customers out of a total market of just 4.7 million mobile customers – a market share of 11 %, almost double Virgin Mobile’s UK result after 5 years!

Telmore’s success had three primary factors driving it:
  • Low prices
  • Simple pricing tariffs where a voice minute always costs exactly the same
  • A CEO who fought passionately for his concept and company.
It is not a coincidence that the founder of Telmore – Frank Rasmussen is right at the top – helping getting EasyMobile underway. His experience from Telmore in Denmark – combined with the very strong Easy brand and the financial backing of TDC – is an excellent combination to help establish and launch EasyMobile.

If we examine just how fast this launch has been, you have to go no further back than to the 23rd February in Cannes, where Easy Jet’s Stelios Haji-Ioannou – at a business lunch – heard about what was happening in Denmark and how Telmore’s concept in so many ways reminded of the discount
airlines concepts – discount airlines like Easy Jet.

Stelios Haji-Ioannou wanted “in” on the mobile market – but at the time had two choices: he could invest and build up a MVNO from scratch – like Virgin Mobile had already done at great expense – or he could find a partner that had all the necessary know-how, success and financing.

Looking at how much money Virgin Mobile has lost through the years, the second possibility was by far the most preferred – if possible – and it would also be the fastest way to launch.

There is little doubt that Stelios Haji-Ioannou has given this matter a great deal of thought and that his meetings with Frank Rasmussen on March 1st and 2nd in Copenhagen marked the beginning of a partnership that will attract a huge amount of attention from the English media in the coming

But there is little coincidence that exactly these two businessmen found each other. They are both entrepreneurs – looking for new ways of doing business and attracting customers. Most people have heard of many of Stelios ‘s companies, but few outside Denmark know that Frank Rasmussen is not just the man behind Telmore, but also the founder of the Internet provider Image Scandinavia that was sold to World Online/Tiscali back in 1999.

In connection with Frank Rasmussen’s sale of Telmore to TDC, he has a clause in his contract stopping him from launching new competitors to Telmore/TDC. So the only way Stelios Haji-Ioannou could get Frank Rasmussen and his invaluable and unique experience onboard EasyMobile was to get TDC involved in the project as well.

The rest is now history. Tuesday August 10th is the official day where it all happens and a new player on the UK mobile market emerges ready to revolutionise the market.

And just how much success can EasyMobile look forward to? The Danish counterpart Telmore were extremely successful and very profitable and we can see no reason why EasyMobile should not have negotiated similar terms for themselves with the UK operator they have chosen.

If TDC can achieve the same market share in the UK as they have with Telmore in Denmark, then EasyMobile will have over 5 million customers in UK in just 3 years. That would be close to double the 8 million mobile customers that TDC have altogether today spread over Denmark, Norway, Lithuania, Switzerland, Germany, Austria and Poland!

With plans to launch EasyMobile in 11 countries that altogether have over 250 million mobile customers, Strand Consult believe the following countries will be the highest priority: UK, Germany, Netherlands, France, Czech Republic, Greece, Hungary, Ireland, Italy, Slovenia, Spain and Portugal.

Entering 12 countries with a goal of a 10% market share is ambitious any which way you look at it – but on the other hand, there is no doubt that web-based discount MVNO’s are here to stay – just like the discount airlines – so the question is not really will they do it – but rather just how bit a double-digit percent will they actually take? In Denmark, discount MVNO’s took 25% of the mobile market in just 3 years! Scary? Only if you are a mobile operator – voice minute and SMS prices have dropped by over 57% in the 3 years the discount MVNO’s have existed in Denmark! No wonder the customers love it!

Strand Consult has no doubt that the prerequisites for the success of EasyMobile are all there for most of the countries. The question is more how operators in the different countries will react to EasyMobile and the aggressive marketing and prices that they – without a doubt – will unveil.

If you think that the founder of Easy Jet, Stelios Haji-Ioannou, has been good at getting media coverage – then we may as well reveal that Frank Rasmussen is just as good – if not better!

You can read more about the web-based discount MVNO’s and their incredible success in Strand Consult’s latest report “The Moment of Truth – A portrait of the discount mobile service providers success” that describes in detail the concept, launch and success of the Danish discount MVNO’s and how they are now spreading across Europe.

The hard facts are simply that voice minute and SMS prices have dropped by 57% in 3 years! Today a Dane pays nothing for their monthly subscription/line rental, 2.6 eurocent to send an SMS and 9-eurocent pr. voice minute regardless of who or when they call! And in case you missed it – the discount MVNO’s are making money on those prices because their costs are so low! Sometimes the most simple easy to understand concepts are just the best, as many traditional mobile operators are now learning – the hard way.
More information “The Moment Of Truth” – A Portrait Of The Discount Mobile Service Providers Success

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