Raymond Yu
Another MVNO to enter the crowded UK mobile market
Lycamobile is looking to launch as an MVNO in the UK. Discussions with MNOs have begun, but no agreement has been signed yet. Vodafone and Orange are the least likely to agree a deal as they each have existing deals with Lebara and IDT mobile respectively, and both UK MVNOs are Lycamobile's rivals. Targeting ethnic minorities with low-priced international calls is one of the most successful MVNO models in Western Europe, as discussed in our recent report 'MVNO strategies in Western Europe'. The report also highlights a trend employed by flourishing Western European MVNOs, which is to replicate successful MVNO strategies in other markets. This is exactly what Lycamobile is doing. Lycamobile is one of the leading players in targeting ethnic minorities in Western Europe. In March 2008 it surpassed 1 million subscribers throughout its total mobile operations, which currently consist of the Netherlands, Belgium, Denmark, Sweden and Norway. Adding the UK to this list is a logical next step and we expect other European markets to also be added to its footprint over the next few months. At first glance the opportunity for Lycamobile in the UK mobile market may not be very attractive. The UK is mature and its MVNO market is also well developed, with 16 MVNOs. However, there are only a few MVNOs that target the ethnic community in the UK, such as Lebara, IDT mobile and Carphone Warehouse's Mobile World, which means there is space for Lycamobile. However, Lycamobile's imminent launch into the UK mobile market also has an ulterior motive (other than simply to attract new mobile subscribers); this is to hold onto its existing prepaid calling card subscribers. Mobile offerings centred on low-priced international calling are direct substitutes to prepaid calling card offerings. Hence, this launch is just as much about protecting and retaining its existing ethnic subscriber base in the UK as it is about as growing it.
