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Tuesday, November 21, 2006

More MVNOs For Sale

According to Telegeography, Debitel has its non-German MVNO operations up for sale. These include:
  • Denmark - 400k customers – networks: TDC & Sonofon aka Telenor;
  • France - 124k customers -network: SFR;
  • Slovenia - 90k customers – network: Mobitel; and
  • Holland - 1.15m customers – network: Telfort aka KPN
It is interesting that a Private Equity company, Permira, owns debitel and they also have a share in the consortium that bought TDC last year. It is becoming more and more apparent that the death of the MVNO in Europe is becoming closer and closer. The first wave of this is “value-based” MVNOs who compete on price and have become squeezed as the operators have found their way in every niche of the market as market saturation as occurred.

Permira only hope for a decent return is playing the major network operators off against one another to get a short term uplift to their customer bases. For instance in Holland, Vodafone, Orange and T-Mobile would love the rush of 1m customers. Even better is that this would hurt KPN. Similarly in Denmark, Telenor and TDC should fight fiercely for the base. The Norwegian Post is reporting that Telenor has bid NOK1bn (£81m) for the Danish subsidiary.

It is interesting that Private Equity is leading the consolidation in the European Telecoms industry. As well as Debitel and leading the consolidation of the MVNOs in Europe, the Private Equity boys also seem to have TIM Hellas up for sale. Next on the cards will be the break-up of TDC which is also owned by Private Equity.

It is interesting that most commentators have always focused on the major networks buying the minors and selling off overlapping properties as the route to consolidation. In reality, the Private Equity groups may perform this function for the majors and in the process earn a very large commission.

Peter Erksine opined today that:
“There's a lot of talk about consolidation in Europe and in the UK, if you look at the mobile phone industry, you could put forward a strong case. Virgin Mobile has been very, very quiet before and since becoming part of NTL...and if [Hutchison's] 3 was a conventional western stock market listed company then the model wouldn't work and they might say it's time to get out"
I can certainly see the point with H3G, but Virgin Mobile? I see Virgin Mobile being extremely vigorous in the market place with quad play offerings through ntl, launch of MobileTV, heavily subsidized contracts through Carphone Warehouse and leading in the Christmas prepay Suicide Subsidy Stakes. It may be an irrational strategy, but it is certainly not quiet. Perhaps, Erksine is just messaging the ntl bondholders that Virgin Mobile is actually currently investing a lot in customer acquisition and yet is going backwards in the marketplace.

If Virgin Mobile fell in the UK – it really would be time for administrating the last rites on the MVNO industry.