Vincent Poulbere
French MVNO market enters consolidation phase
There are currently a dozen mobile virtual network operators (MVNOs) active in France since Debitel was the first to launch in mid-2004. They totalled 1.4 million customers at the end of 2006 - which is a 2.79% market share (up from 0.6% at the end of 2005). Several events in recent weeks have had an impact in this market:-Debitel's activities in France are up for sale, for an estimated €30 million; potential acquirers are Phone House, Coriolis and Avenir Telecom. -Credit Mutuel, a French bank, injected €60 million in NRJ Mobile and increased its share to 50% of NRJ Mobile's capital. -TF1 Mobile (not an MVNO strictly speaking but a licensing agreement between TF1, a leading French TV channel, and Bouygues Telecom) ceased its commercial offering after having recruited 60,000 customers.Comment: During the past two years, discussions around MVNOs in France were mostly around 'who will the next one be?' and culminated last year with the commercial launches of heavyweights like Virgin Mobile, Carrefour and Auchan. Now, back to the market realities, it looks like we're entering a phase of consolidation. The market has been slow to start - customers are difficult to acquire in mature market conditions, especially the high-spending ones, which network operators lock in with attractive handset renewals and 24-month engagement contracts. However, the introduction of a new number portability process in May this year could relax customer acquisition barriers for MVNOs. We predict close to 10% market share for MVNOs by 2010, which means there won't be room for everybody. In addition, the margins are tight for French MVNOs, as reflected by NRJ Mobile's revenues and profitability issues (see EuroView Daily, 31 January). Overall, we expect 3-4 big mass market, consumer-centric MVNOs to remain with a few smaller MVNOs targeting specific customer segments or usage. So who are the potential winners?Virgin Mobile, NRJ Mobile and Tele2 are currently the three leaders in terms of number of subscribers (respectively 304,000, 312,000 and 350,000 customers). Among these, the future of Tele2 Mobile is uncertain as Tele2 has sold its fixed operations to SFR. Also on the consumer front, we believe Carrefour and Auchan, two big food retailers, have a role to play in the low-end, mostly prepaid market. Among the niche players, Mobisud has an offering targeting North African people living in France. Ten Mobile also has an innovative value proposition based on mobile Internet services, but is facing slow customer uptake despite heavy commercial investments. Finally, two brand licensing offerings, M6 Mobile (Orange) and Universal Mobile (Bouygues), seem well established now with 767,000 and close to 600,000 customers respectively. But there might not be room for many others of this kind, as demonstrated by the end of TF1 Mobile (Bouygues) and the deafening silence concerning Fnac Mobile's (Orange) results.
