Mobile services

Hutchison Courts MVNOs With Global MVNE

Hong Kong's Hutchison Whampoa has launched a new business to help companies become multinational mobile virtual network operators (MVNOs) using its networks in Europe and Asia.

The announcement follows reports earlier this month that web giant Google (Nasdaq: GOOG) has been in talks with Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY) about forming such a multinational MVNO, offering low-cost services to US customers travelling overseas. (See Report: Google Planning Overseas Roaming Shake-Up.)

Hutchison said that Hue -- as its new venture is called -- would announce partnerships with a number of MVNOs during the next few months.

Hue appears to be one of the first examples of a global mobile virtual network enabler (MVNE), providing a single point of contact for organizations that want to launch mobile services across a number of geographical markets without building their own networks.

Typically, a company setting up an MVNO business would need to form a partnership with a network operator in each national territory -- and establish relationships with various other players in each of those markets -- making a multinational launch a costly and laborious process.

Hutchison thinks it can simplify matters by providing a single point of entry for prospective MVNOs eyeing up a number of markets.

The Hong Kong company has a broad network footprint, with networks in Austria, Australia, Denmark, Hong Kong, Indonesia, Italy, Ireland, Macau, Sri Lanka, Sweden, the UK and Vietnam. Should MVNO customers want to launch services elsewhere, it has promised to carry out negotiations with connectivity providers as part of the Hue service.

Hutchison says Hue will also offer services covering customer relationship management, billing and provisioning and act as an "interface" with third parties such as credit management agencies and logistics partners.

"Today's mobile wholesale market is fragmented and new entrants to mobile are often challenged with needing to understand market nuances and regulations in different countries," said Jarrod Nink, Hue's CEO, in a company statement.

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Hue could hold particular appeal for large over-the-top players that remain unhappy about their dealings with big network operators. Companies such as Google (Nasdaq: GOOG) and Apple Inc. (Nasdaq: AAPL) might see an opportunity to lure customers away from the incumbents through service innovation and low-cost tariffs.

Indeed, its strategy of scrapping roaming charges for customers travelling abroad could make Hutchison an obvious choice for low-cost MVNOs. Earlier this month, Hutchison's Three UK -branded UK business added further destinations to its roam-free Feel at Home service, meaning customers can now use mobile services at domestic rates in a total of 18 countries.

Hutchison's acquisition strategy could also support the development of Hue. The company is awaiting a regulatory decision on its £10.25 billion ($15.4 billion) takeover of Telefónica UK Ltd. (O2) and was last month reported to be in advanced talks about merging its Italian business with local rival Wind Telecomunicazioni SpA , currently owned by Russia's VimpelCom Ltd. (NYSE: VIP). It has also recently completed takeovers in Austria and Italy. (See Telefónica Seals $15.2B O2 Sale to Hutchison and Hutchison's Wind of Change.)

Clearly, a bigger network footprint would make Hue even more attractive to MVNO partners.

Many of Hutchison's network rivals have been fiercely resistant to the market entry of more MVNOs given the impact of price-based competition on service revenues.

In several European markets, including Austria and Germany, regulators have ordered network operators to provide MVNO services in response to recent bouts of consolidation. Telekom Austria Group has said this poses "additional risks" for its business, while Deutsche Telekom AG (NYSE: DT) has accused authorities of strengthening MVNOs at the expense of network investors. (See Net Loss Prompts More Cuts at Telekom Austria.)

Hutchison did not respond to questions about the impact Hue might have on its own retail operations, although its European business has recently flourished.

Buoyed by takeover activity, the company's 3 Group Europe subsidiary -- which includes businesses in Austria, Denmark, Ireland, Italy, Sweden and the UK -- flagged a 23% increase in EBITDA last year, to HK$15.6 billion ($2 billion).

The M2M marketplace has already given rise to several global MVNEs, with US-based KORE Wireless Group Inc. and Wyless among the most prominent. Taking advantage of roaming agreements with various network operators, both players claim to offer a range of managed services for organizations providing M2M services in automotive, energy, healthcare and other vertical markets.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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