Vodafone UK Strikes MVNE Deal With Digitalk
Opportunity not threat
A number of European network operators have recently complained about pricing pressure from MVNOs, many of which have been steered into the market by regulatory authorities trying to mitigate the impact of recent takeover activity on competition.
Yet Ashdown believes MVNOs appealing to specific ethnic groups or niche segments do not pose a threat to network operators.
"In markets as saturated as the UK, the mobile network operators are wondering where revenue growth is going to come from," he says. "An ethnic or retail MVNO should be quite complementary and not cannibalizing revenues."
As Ashdown points out, some network operators have even launched their own MVNOs as a "secondary brand" strategy. A high-profile example is giffgaff, a UK MVNO that uses the network of O2, the country's second-biggest mobile operator, and is owned by O2 parent Telefónica .
Nevertheless, Digitalk is skeptical of efforts to develop multinational MVNOs, noting the huge differences between various geographical markets.
"Regulatory and competitive environments are very different and while you can appreciate the sentiment of doing a pan-regional MVNO, the reality is that it requires a heavy investment," says Ashdown.
Hong Kong's Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY) set up a global MVNE business in April, claiming it could provide a single point of contact for organizations keen to launch mobile services across a number of geographical markets, but Hue -- as the venture is called -- has yet to announce any MVNO customers. (See Hutchison Courts MVNOs With Global MVNE.)
As a privately owned company, Digitalk does not disclose details of earnings. But Ashdown says it has been profitable for years and has been funding its development of cloud-based technology through company profits.
Digitalk works with a number of partners on network infrastructure but owns the intellectual property at the heart of its platform, says Ashdown.
— Iain Morris, , News Editor, Light Reading