No room for mobile virtual operators?

THE SLOVAK mobile market is saturated, with mobile service penetration reaching 116 percent at the end of 2011. This means that, in effect, everyone who wants to use mobile services already does so. This may be one of the reasons why Slovakia has so far been without a ‘real’ mobile virtual network operator, i.e. a mobile phone operator that provides services using assets leased from an existing mobile network operator.

THE SLOVAK mobile market is saturated, with mobile service penetration reaching 116 percent at the end of 2011. This means that, in effect, everyone who wants to use mobile services already does so. This may be one of the reasons why Slovakia has so far been without a ‘real’ mobile virtual network operator, i.e. a mobile phone operator that provides services using assets leased from an existing mobile network operator.

The Slovak Spectator spoke about the Slovak mobile market and why it is without a mobile virtual network operator with Filip Hanker, editor-in-chief of the website MobilMania.sk, which is dedicated to mobile telephony.

The Slovak Spectator (TSS): In the past, several companies were interested in providing mobile virtual network operator services in Slovakia. How do you explain the fact that none of these companies has started providing such services to date?

Filip Hanker (FH): It is only possible to speculate about the reasons: [specifically,] that the current operators were not willing to share profits to a bigger extent and did not offer reasonable prices to generate a [sensible] business model. But I am also afraid that simultaneously those interested companies might have realised during consultations and negotiations that the launch of a mobile virtual network operator is really demanding and requires too much effort and too much money.

TSS: Do you think there is room for a mobile virtual network operator or operators on the Slovak mobile market?

FH: The market is saturated and its size is limited by the small number of citizens. Now that the trio of large operators and the several smaller operators have squeezed prices, room for competition in the form of a mobile virtual network operator is narrowing because this would involve too-high costs and too-long a pay-back period. Saturation in this sense means that actually everybody who wants to have mobile services already has them.

There is a service where space for competition might exist – mobile internet. But I think that operators will not rent their networks, which they have invested huge funds to build, for a reasonable price. They would do this only if regulation forced them to.

TSS: What advantages does reselling of products and services bring to mobile operators with products like Mphone, FunFón or Tesco Mobile?

FH: It brings an opportunity to focus on marketing and attractive products without experiencing the teething problems that would probably occur if such an operator were to manage a network on its own or operate the whole customer service. Plus this model brings valued communication of the main brand along with the mobile brand, i.e. Tesco – hypermarkets, FunFón – Fun Rádio, etc.

I also assume that branded operators profited from the situation after the arrival of the third operator, when O2 needed to expand as fast as possible even at the cost of sharing a solid percentage of the profit with somebody else – thus they probably got some interesting wholesale prices.

On the other hand, the main operators (Orange, Telekom and O2) take advantage of the possibility to sell services via different routes to groups of clients which they would otherwise have difficulty addressing, or be unable to address, and also sell products which they cannot sell for strategic reasons (they either do not fit into their business line or the service is too cheap, or then the portfolio would be too extensive). They can try, together with a partner, some experiments or a completely different style of communication than with the common line of the brand.

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