The Moment of Truth – A portrait of the Discount MVNO / Mobile Operators’ success

This revised 4th edition of the report that describes and analyses eight Internet-based Mobile Operators that have turned the Danish mobile market upside down. The report examines the historical development, the extremely hard competition they have created, how this has affected the market shares, the resulting fall in prices pr. minute and SMS prices and finally last but not least, how churn has exploded as a huge number and share of subscribers terminate their contracts.

The new reality that Danish Operators have to face is that:

-The price of a mobile minute has in only 6 months dropped from 0.17 Euro to 0.09 Euro
-The price of an SMS has fallen from 0.07 Euro to 0.03 Euro
-The price of a subscription has fallen from 6.7 Euro to 0 Euro
-Mobile consumption has not risen during this period
-The last two years growth in the mobile market has been decimated

The report not only describes what has happened in Denmark but also puts forward a number of predictions as to how these developments will affect the future and what consequences the huge success of the Danish Discount Mobile Operators will have on other European markets. We are already certain that we will see this type of market players grow across Europe exactly like the prepaid market grew in its infancy.

Also in the report is the latest developments and the true story about easyMobile, how the joint venture between easyMobile and TDC was negotiated, why EasyGroup chose TDC as their partner and how we see easyMobile compared to Virgin Mobile.

– What customers do the various discount MVNO’s have?
– Segmentations of these customers by age, gender, geographically
– What operators did these new customers churn from – and why?
– What do the existing operators customer bases now look like – compared to the discount MVNO’s?

-the latest developments in the UK and the true story about easyMobile,
-how the joint venture between easyMobile and TDC was negotiated,
-why EasyGroup chose TDC as their partner
-how we see easyMobile compared to Virgin Mobile.
Predictions for the number of subscribers and revenue by of Discount MVNO subscribers in 16 European Countries

4 years after the UMTS auction disaster hit the European operators and a whole sector thought the market was finally turning, a new financial disaster has struck right in the centre of the mobile market. Today the number one selling point is simply the price and most operators have passively chosen to copy and thereby follow the discount service providers’ concept – instead of taking up the fight. The idea was to create a discount supermarket that competes against your own supermarket, a good enough idea until all your customers find out that they can save over 60% by simply switching to your discount supermarket.

The results are very apparent. The money is pouring out of the operators’ cash boxes and the large revenue from subscriptions will most probably disappear over time. Prepaid customers are the first to switch to the new discount players and together with the enormous price reductions we have seen in Denmark this will have consequences for both the mobile operators and their employees. The whole sector is standing on the brink of the point of no return!

It has been said many times through the past years that the Danish mobile market is one of the toughest in the world. If that was true 3 years ago, then we have absolutely no idea what to call the competitive situation today – 5 mobile operators each with their own network and 4 large serious service providers fighting over a mere 5.5 million Danes mobile phone usage. This is a situation that you will have difficulty-finding elsewhere in the world… If there is a mobile “Hell on Earth” it is undoubtedly in Denmark.

Strand Consult has never had any trouble in evaluating the mobile markets and showing the best way to create or maintain revenue and profits. Each new report we publish is part of a series of reports that together focus on the technological developments, the importance of distribution and which business models will have the most significance and success in the future marketplace.
Using text, graphs and figures, we describe in detail step by step what happens when a potential customer approaches one of the new web based discount mobile operators with the intent to switch to their services:

How do their web-based services and concepts perform?
What are their sales and delivery processes?
Which mobile services can they offer their customers?

There is no doubt in our minds that the different web-based mobile operators have already had an enormous influence on the attitude and buying patterns of the mobile customers and will thereby have a big say in how the mobile markets will develop – and who will be making money – in the future. The web-based discount mobile operators are definitely here to stay, so now the question is not whether they will affect your market – but just how fast, widespread and hard they will hit.

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