Onfone – the new MVNO that in just eight months cost the jobs of 10 top Danish directors in the mobile industry
|– including a CEO, a COO and a CMO!|
|Through the years a lot has been said and written about MVNOs – especially those that have been dominating the Danish mobile market. For the past 10 years, Denmark has continually been one of the mobile markets where innovative new MVNOs have attracted the most attention.|
10 years ago it was the two Web-based discount MVNOs Telmore and CBB that people were talking about. These two MVNOs managed to reduce Danish mobile prices by 56% in just six months and were the direct reason why Orange had no choice but to abandon the Danish market. You can read more about the first 10 years with Telmore here:
Strand Consult congratulates Telmore, as the mother of all no-frills MVNOs celebrates its 10th birthday
But let us just start by making one thing very clear; MVNOs are – and will continue to be – an extremely efficient tool for operators that want to implement multi-brand strategies on their markets. MVNOs can be utilised to make life very difficult for competitors. Today it is a fact that the European operators that have had the most aggressive MVNO strategies over the past 10 years are currently the most successful operators in Europe.
Back in 2006, Onfone originally launched as an IP telephony company. They spent their first three years battling to keep their head above water and continually tried reinventing their business concept over and over again, until a new bundled offering consisting of 5 hours free voice, free SMS, free MMS and an enormous amount of included mobile broadband hit the Danish market – and immediately became a huge success among Danish mobile consumers.
Onfone’s path to success
Once Onfone had discovered the correct product mix, everything started moving very quickly. In just eight months, Onfone handled around 20,000 high consuming netadds a month. On a market with a population of just 5.5 million people and which has 4 mobile operators and over 40 brands fighting to attract the attention of the Danish mobile consumers, 20,000 high consuming customers is a great deal – especially considering that Onfone only has 50 employees and only uses one distribution channel; their website.
There is no doubt that Onfone’s pricing was aggressive. On the other hand the wholesale prices they had negotiated with their hosting mobile operator were identical to those given to other MVNOs. The only difference was the way Onfone was bundling and marketing their products.
In fact there are surprisingly many similarities between what Telmore and CBB achieved 10 years ago and what Onfone now has achieved – and even the outcome is the same. The only real difference is that 10 years ago it took three years for the MVNOs to achieve success, while Onfone only needed around 6-8 months.
Onfone cost the Danish operators a potential revenue loss of around 2 billion DKK on a total Danish market of 17 billion DKK. During the first 6 months of Onfone’s success, the Danish operators reacted by firing top directors one after the other, resulting in 10 top Danish directors losing their jobs in just six months. Not surprisingly they were replaced by new bosses that had experience from the discount MVNO market.
It is no secret that Strand Consult is one of the companies that knows most about what has been happening on the MVNO market during the past 10 years. We were the first company to publish the initial story and subsequent reports that web-based no-frill MVNOs would change the mobile world. Today our MVNO reports have been purchased and are being used by over 100 mobile operators around the world. The Moment of Truth – A portrait of the Discount MVNO / Mobile Operators’ success
In our latest update of our How to Succeed in the Second-Generation MVNO Market report we have included a detailed case study of Onfone and how they in a record-breaking space of time created a successful prepaid MVNO with an average customer ARPU of 23 euro per month. Onfone chose to sell their business to the Danish incumbent TDC, at a price that corresponded to 200 euro per customer.
The Onfone case is yet another example of MVNOs often been far more successful at running a cost efficient business than the existing mobile operators. This is most often due to MVNOs being far more focused, and offering very clear messages that the customers they are targeting easily can understand.
Once again, Strand Consult has spent the necessary time and manpower to analyse and describe Onfone’s success.All in all our case study gives you a very detailed description of Onfone, how the company developed over time and how they have influenced the Danish market. It is very important to us that we always deliver specific, impartial and detailed information to our customers, which is why our research is never based on newspaper articles or information from the Internet, but on direct inside information from the companies in question, information that journalists and others in the industry do not have access to.
Strand Consult has the world’s largest MVNO research department, no other company has published as much, or as detailed information and knowledge about this market as Strand Consult. You will often see our information and case studies from our reports being quoted by people at conferences and being used in articles.
If you would like to learn more about the Onfone case and our new report How to Succeed in the Second-Generation MVNO Market please do not hesitate to call or write to us. We would be delighted to have the opportunity to tell you more about the strategic knowledge we can offer you about the MVNO market, what it looks like and how it is developing.
More information: How to Succeed in the Second-Generation MVNO Market