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Still room for challengers in European mobile market

Orange has announced a commitment to cover Europe with LTE by 2015

Despite the fact that the credit crunch has taken its toll on the global telecoms market, analysts believe there is still room for challengers in the European mobile space.

In the European mobile market, which is highly saturated and notoriously competitive, mobile carriers are in a survival of the fittest to stay in the game, but the performances of some of the new entrants, suggest there is a role for these carriers other than as acquisition targets.

Analyst Frost & Sullivan cites three strong performers – 3 in Italy and the UK, P4, which operates under the brand Play in Poland, and Yoigo in Spain – as stand out examples.

“There are two main lessons from the performances of 3, Play and Yoigo,” said Frost & Sullivan analyst Yiru Zhong. “First, new entrants, whatever their market performance, have the ability to motivate established players to accelerate innovation ranging from service offerings to partnerships to the way they engage with existing and new customers.

We recently interviewed Chris Bannister, CEO at Polish carrier Play. He talks to telecoms.com about the trials of the small independent and the dirty tricks he believes are being employed by powerful international incumbents.

“Second, a successful value proposition cannot rely on low cost alone. Yoigo’s performance in terms of market share confirmed this view that was first evident from the lack of sustained success in Virgin Mobile and other low cost MVNOs in UK. Yoigo can become a viable MNO in the mobile market by redefining its value proposition to tap into a specific customer segment or customer need.”

3 Italy began operations in 2003, when the Italian market had almost 100 per cent population penetration and was dominated by three major players. 3 UK faced equally challenging conditions. But by the end of their second year of operation in 2004, both 3 UK and 3 Italy had managed to capture 4 – 5 per cent market share in their respective markets.

Play launched in Poland in 2007 in a market with 109 per cent penetration, but a strategic partnership with Onet.pl, one of Poland’s key online players, to combine its wireless services with internet opportunities such as social networking, helped Play to gain a 5 per cent market share by the end of 2008.

Meanwhile in Spain, Yoigo entered the market in December 2006 as a no frills operator, facing 107 per cent penetration. By the end of 2008, Yoigo had only managed to gain a 2 per cent market share. Nevertheless, Yoigo’s business plan relies on its ability to control cost while maintaining its low tariff strategy.

“We believe that there is a role for challengers in the mobile market as competition increases innovation in the market,” said Zhong.


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