Carrie Pawsey, Raymond Yu
Lebara launches prepaid MVNO in the UK
This morning, Lebara announced the launch of its prepaid mobile services in the UK, with Vodafone as its host provider. It will offer a prepaid SIM card targeting ethnic customers with low cost international rates to key destinations like Poland and other Eastern European markets; and Asian markets - in particular China, South America and also Africa, particularly Ghana and Nigeria. In addition, Lebara has kept its national call rates simple and competitive by offering a flat fee of £0.15 per minute for all national calls and £0.10 per SMS regardless of whether it terminates in the UK or abroad. Primarily a SIM-only proposition, it will also offer a small range of handsets. Comment: Since its launch in 2001, Lebara has built up experience and knowledge in targeting ethnic customers. It initially started by offering calling cards in the Netherlands and now has expanded to 13 other European countries and offers calling card and mobile services. Lebara's success is built on offering cheap and simple pricing for international calling, understanding ethnic customers and using targeted distribution routes such as ethnic supermarkets. The UK launch of prepaid mobile services follows launches this year in Spain (also with Vodafone) and Switzerland. It has also been active in the Netherlands for some time. Lebara will follow a similar model that it has used in those markets, a key part of which is getting its distribution strategy right. In the UK, Lebara's high street distribution partners will be Phones 4U, and an increasing network of ethnic retail outlets; this gives it a good reach to both national and ethnic customers. It is also partnering with data select who are providing logistical support for the SIMs. Targeting the ethnic market has become a key objective for many European operators. It is interesting to note that only a few weeks ago Vodafone launched its reduced international calling rates for the consumer market. It is obviously also trying other routes via its agreement with Lebara, who are a recognised success in this sector. We believe there is a market for its prepaid proposition as it is much more convenient than using calling cards, but we expect the deciding factor (for consumers) will come down to price. For Vodafone this is another MVNO deal following the Talk Mobile deal with Carphone Warehouse announced last week. Vodafone is clearly intent on growing its wholesale business and has been increasing its internal resources and capabilities to target the wholesale sector. In addition, Lebara is a good fit for Vodafone as it targets the ethnic minorities, a segment which all the UK MNOs are particular weak at pursuing. While we expect Vodafone to announce more wholesale deals in the future, we still believe it will be carefully selecting its partners and mapping those players which can complement its existing retail strategies. Expect quality not quantity.
