Low-cost MVNOs Shake Up Stagnant Prepaid Mobile Market

Europe : Low-cost MVNOs, shaking up a stagnant European prepaid market, are threatening to grab as much as 15 to 20 percent of the available market share over the next five years, according to "EasyMobile: Trends in Low-Cost Service Provision in Europe," from Strategy Analytics.

Stelios Haji-Ioannou( inset ) threatened to push the UK mobile market into a price war in when EasyMobile was launched earlier in 2005.

Operators are finally waking up to this unpleasant truth, and are reacting by launching their own low-cost offers, like "Simyo," from E-Plus, which launched last week in Germany. However, the threat from no-frills players still looms large over the entire mobile industry.

Although prepaid users now account for 60 percent of mobile users in Western Europe, these prepaid users are now being targeted by low-cost MVNOs offering significantly lower call rates.

"Even though prepaid was the engine that accelerated mobile growth in Europe," said Sara Harris, Senior Industry Analyst at Strategy Analytics, "the majority of prepaid offers today are not only expensive, but they ignore customer demands for drastically lower-cost pricing. Thus, low-cost MVNOs have been able to storm into the market appropriating customers for whom price is king."

David Kerr, Vice President of the Global Wireless Practice, noted, "Existing operators are beginning to fight back, but are constrained by fears of an all-out price war which could dilute brand loyalty."

The Simyo launch, a new, German, low-cost brand from E-Plus, goes head-to-head with Germany's thriving MVNO culture, adding much needed choice and value for money to the prepaid market.

Strategy Analytics' report establishes the status quo in the prepaid market today, detailing the impact of the emerging multiple low-cost MVNOs, profiling a number of market players including Virgin Mobile, Telfort, EasyMobile and TeleFinland, and detailing the varying reactions to this latest business threat.