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Europe Market Perspective Vol. 7, Issue 6Product Type: Market Research ReportPublished by: Pyramid Research Published: April 2007 Product Code: R8-559 Description During late March and early April 2007, four companies committed to launch MVNO operations until the end of the year—Carrefour, Poste Italiane, and BT (on Vodafone’s network) and Coop (on TIM’s network). Coop is expected to become the first MVNO of the market in April 2007. The growth of MVNOs in the market will be aided by the strength of the retail network controlled by some of the new entrants. New regulations on price transparency and comparability will favor their low-cost proposition, but tariffs have limited room to fall after intense pressure from structural market factors and the recent Bersani package. TIM and Vodafone, on the other hand, could use retailer MVNOs as a complement to their value chain. H3G’s all-3G network will allow it to play the low tariff/high usage/high ARPS card to grow in the high-end. MVNO entry will impact Wind hard, calling for a creative strategy which draws on the strengths of the MNO model as well as the weaknesses of the MVNO one.Table of Contents In less than a month, four MVNO launches were announced in the Italian market—Poste Italiane, Carrefour, and BT (all three on Vodafone’s network) and Coop (on TIM’s network). The earliest launch, Coop, the first MVNO of the market, is expected to take place this month. All four services will compete with a full MVNO model with full strategic independence and own-branded SIMs, rather than the restricted no-SIM voice reseller model initially suggested in 2006.The Italian mobile market, with its high channel costs and a high transaction volume generated by the overwhelmingly prepaid subscriber base, is a fertile environment for the strength and capillarity of the distribution channels controlled by the retailer MVNOs. Recent regulatory measures aimed at increasing price transparency and comparability should favor the MVNOs’ price-based strategy. But low per-minute tariffs, caused by fierce competition between the market’s four operators as well as the recent Bersani package, will limit the appeal of the low-cost proposition. The retailer MVNO model is more of an opportunity than a threat for TIM and Vodafone. In an environment of fast-falling margins and increasing competition brought on by regulatory changes, they could use the MVNOs to bypass costly retail channels and save on subscriber acquisition and retention. H3G should play on the strength of its high-end market positioning and its low-cost all-3G network. Wind’s current no-frills market proposition will be hit directly. |
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