The MVNO market is thriving in the Netherlands, according to Telecompaper's latest research report on Dutch virtual operators. While the report showed the number of MVNOs roughly stable in the six months to March 2009 at around 50, Telecompaper forecasts a round of consolidation coming up. The mobile network operators may be driven to buy up some of the more successful niche players, as regulatory pressure on wholesale prices increases the focus on profit margins. At the same time, for every market exit, there's a new entrant waiting in the wings. The rise of MVNEs in the Dutch market is helping even the smallest MVNO ambitions take shape.
Since the end of March, six MVNOS have already disappeared: UPC Mobile, Tommy Telecom, Miles2Call, Easytel Mobiel, Countdown Mobiel and LowCall. More exits can be expected from the Debitel brands like Lowcall, after KPN and Vodafone took over the Debitel customer base; the Debitel website already directs customers to KPN brands such as Simyo. KPN's Ay Yildiz may also be up for the chop, after showing little growth. KPN could merge the Turkish brand with its bigger ethnic MVNO, Ortel Mobile. Given the top five MVNOs have 70 percent of the subscribers, a number of smaller providers are also likely to be squeezed out of the market. Telecompaper's research shows there were at least 18 MVNOs with less than 10,000 subscribers at the end of March; since then, two have already disappeared (Tommy Telecom and LowCall).
Acquisitions by the mobile network operators are also a possibility. KPN is the most likely candidate given its multi-brand strategy for targetting different market segments. MVNOs with a clear target market and significant market share are the expected takeover targets. Telesur, a recent MVNO that has shown success targeting people of Suriname origin, is a possibility, although the company is already controlled by the Suriname incumbent operator. The shipping sector specialist Dekatel may also attract interest from buyers. So far T-Mobile, which recently re-introduced the Ben brand, and Vodafone have been targeting the 'ethnic' market more on the wholesale level. Vodafone supplies network capacity for Telesur, while the MVNO Lycamobile works with both T-Mobile and Vodafone. Price erosion is also driving consolidation, making it nore difficult for MVNOs to turn a profit. The European Commission-led drive for lower interconnection prices will make it more difficult for the dominant network operators to offer attractive wholesale prices to MVNOs. With the MVNO market completely unregulated, the operators will see pressure on their profit margins.
This may also encourage the further switch in wholesale providers and the rise of the MVNEs. Already we've seen Rabo Mobiel switch from T-Mobile to KPN, Tele2 moving from KPN to T-Mobile and Lycamobile adding a second network deal with T-Mobile. The growth in the MVNE market will help sustain some MVNOs and encourage the entry of new players. The MVNEs function similar to a cooperative, offering their customers the advantage of collective purchasing power. The three dominant Dutch MVNEs, Aspider, Teleena and Elephant Talk already have almost 30 customers. Their services allow even the smallest of MVNOs to enter the market through complete outsourcing. Telesur is a good example. Its target market of Surinamese people is merely a niche within a niche. But with the help of Teleena as MVNE and using the Vodafone network, Telesur has proven successful in attracting customers since its launch late last year - despite the intense competition from other ethnic MVNOs.
More newcomes are expected in the coming months. These include Club Mobiel's plans to introduce dedicated mobile services for each of the 18 first-division football teams. FC Groningen, Vitesse and PSV are already marketing the services, and NAC is preparing a launch. In August, the MVNO Tringg also started services, offering a flat-fee package of voice, SMS and data services. With few MVNOs specialising in data servcies, further innovations such as this should drive market growth.
