- CCS Insight report finds that U.K. MVNO segment is thriving thanks to affordable plans
- The proposed Vodafone-Three merger could bring some disruption, however
- The U.K.’s CMA has raised concerns about reduced choice in the wholesale market as a result of the merger
The U.K. mobile virtual network operator market got a whole lot bigger this week after MVNO enabler (or MVNE) Transatel announced it had signed 12 new deals, including with VirtualX-owned VMobile, which claims to be launching the U.K.’s first 5G mobile service based on blockchain technology.
Transatel, headquartered in France and owned by Japan-based NTT Group since 2019, benefits from a longstanding arrangement with BT Wholesale that enables it to make use of the 5G network run by mobile operator EE. Other newly signed MVNO partners include utility PE (previously known as Pozitive Energy), which is now adding mobile to its enterprise telecom services portfolio.
Jacques Bonifay, CEO of Transatel, said the company has now garnered 14 years of experience in the U.K. MVNO sector and serves a wide range of B2B and B2C verticals.
Established in 2000, Transatel also provides MVNE services in other European markets including France, Belgium, Switzerland, Luxembourg and the Netherlands. In 2017, it launched the Ubigi brand for global IoT connectivity, connected cars and eSIM roaming services for travelers.
Possible disruption ahead
In general, information about MVNOs is not always that easy to come by unless it is provided by national regulators. In the U.K., for instance, telecoms regulator Ofcom does not track MVNOs because it is not a regulated area.
Research firm CCS Insight recently compiled a report that found the MVNO market is in fact thriving in the U.K. According to data from the analyst firm, the MVNO segment grew by 8% in 2023 after adding 1.2 million net new customers. This compared to just 3% growth for the overall mobile market and 2% for the four network operators (EE, Three UK, Virgin Mobile O2 and Vodafone UK), it said.
Kester Mann, an analyst with CCS Insight, observed that Transatel’s recent expansion reflects the vibrant MVNO sector in the U.K.
“Since 2010, the U.K. MVNO market has more than doubled in size,” he said.
He also noted that EE, which operates the nation’s broadest 5G network, has long underperformed in the MVNO space. “However, working with Transatel, and following its recent contract win with Lyca Mobile, it should be able to make up ground in this increasingly important market,” he said.
The CCS Insight report found that Virgin Media O2, which hosts the two biggest virtual providers – Tesco Mobile and Sky Mobile – is the clear leader, hosting more than half of all MVNO connections, at close to 10 million. EE and Vodafone UK each have about a 15% share of mobile connections while Three UK is fourth with 11%, almost entirely thanks to iD Mobile, the report added.
Mann warned that the proposed merger of Vodafone UK and Three UK could bring a certain level of disruption to the MVNO market.
“Much depends on the position taken by the [Competition and Markets Authority/CMA], which has raised concerns about reduced choice in the wholesale market from moving from four networks to three. But there could also be opportunities, either through more attractive terms offered by the merged company, which has an incentive to fill its expanded network, or through remedies needed to get the deal across the line,” he said.
Indeed, last week, Vodafone and Virgin Media O2 highlighted opportunities for MVNOs as part of an extended network-sharing deal predicated on the deal being approved. Their argument is that three “high-quality, scaled wholesale competitors” would offer a better choice.
Mann has commented that not all U.K. MVNOs have been a success. For example, he noted that Mobile by Sainsbury’s failed to get close to matching the take-up achieved by its supermarket rival Tesco before Vodafone terminated its contract. A service from the Post Office struggled against strong competition and shut down in 2016, and ad-funded providers Samba Mobile and Blyk failed to make their innovative business models work.
“But the role of MVNOs in the UK telecom market is as important now as it’s ever been. With household budgets remaining squeezed, their simple, competitive and flexible offers are resonating with customers,” he said.