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Jonathan Marchbank

Jonathan Marchbank. CEO, Virgin Mobile (Australia). Opportunities for an MVNO in Australia. What is an MVNO? The Virgin Group Virgin Mobile Current Australian market scenario Future positioning and opportunities for Virgin Mobile. The MVNO is n ot ‘M’ or ‘V’. MVNO D efinition.

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Jonathan Marchbank

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  1. Jonathan Marchbank CEO, Virgin Mobile (Australia)

  2. Opportunities for an MVNO in Australia What is an MVNO? The Virgin Group Virgin Mobile Current Australian market scenario Future positioning and opportunities for Virgin Mobile

  3. The MVNO is not ‘M’ or ‘V’

  4. MVNO Definition Access Switching Network elements Tariffing & billing Customer care Marketing Mobile network operator Super dealer Mobile network operator Service provider Mobile network operator Enhanced service provider MVNOs UK Mobile network operator Classic MVNO AUSTRALIA Telecoms capability required and level of investment Ability to differentiate service Commercial control high med low Source: Non-Telecom MVNOs: Motives and Business Set-ups. MSc Thesis, T. Elstedt, M. Huber (adapted)

  5. The Virgin Group • Well known global brand • ‘Branded Venture Capital’ Organisation • 200+ independent Virgin companies globally • Normally Joint Ventures with ‘expert’ partners • Companies promote consistent brand and organisation values • CEOs act with relative independence • HQ is a handful of people • RB is passionately involved in making sure Virgin companies ‘challenge’ • People First, Consumer Champion • Entrepreneurial

  6. Virgin Mobile Globally • 1999 MVNO in UK with T-Mobile • 2000 MVNO in Australia with C&W Optus • 2001 MVNO in Asia with SingTel • 2002 MVNO in USA with Sprint • Asia closed in 2002 – prior to incurring significant losses • UK has 3m+ customers and profitable • US has ~ 1m customers, soon profitable • Aus has 300k+ customers, soon profitable • Key proposition consistent globally: • Different from incumbent. Young, prepay focus, simple tariff to understand, cheeky, challenging, entrepreneurial

  7. Virgin MVNO in Australia A 3-year-old wholesale partner of the Optus network 300k+ real customers (Pre & Post) 240 staff (inc retail and customer service) Expect to be profitable next year Marketing ‘simple value’ to select segments of consumers Strong ‘non mobile’ brand Strong distribution Small enough to try new business models Low cost of operations

  8. Aussie Mobile Market Mobile Subscribers Millions 15.5 14.4 12.6

  9. The Current Market: Postpaid • DVD or Playstation…now essential! • Heavy handset subsidy • Optus vs Telstra • ‘3’ raid on Vodafone • Irrational ‘big dick’ syndrome • Should be farming not hunting Deal Crazy!

  10. The Current Market: Prepaid Plenty of gross new ads each month (200k per month +) Totally different metrics to postpay ‘contract’ market…still learning Selling a replacement phone or selling a new connection? Saturation of retail channels, distributors filling ‘route’ channels Acquisition Costs vs Payback How to incentivise loyalty and lifespan of a Prepay customer? Handset is still the driver Retailer still the winner

  11. The Current Market: Summary 5.5m handsets sold in 2003 (+20% on 2002) Prepaid ‘volume’ numbers and mechanics of reporting distort true ‘market’ share It’s a voice and text market…services evolution will take time & more realistic pricing Issues for any profit-focussed mobile SP/Carrier: Justifying postpaid acquisition costs Keeping real customers It’s a handset driven market Paying retail margins on acquisition AND recharge/airtime 5 carrier products on one retailer’s shelf Price elasticity on tariff. Does lower price equal more usage?

  12. The future for Virgin Mobile Targeted @ specific segments 500k+ voice customers by 2005/6 Manage lifecycle from youth to young adult Combine brand, product and packaging with alliance partners eg. Channel [V] Create a Virgin ‘network’… Music stores, airline, credit card… loyalty programs beyond telco billing and discounts. Not to challenge ‘size and scope’ of the big 3… Seek a return and profit Compliment network provider partner Investigate the evolution of mobile services

  13. Channel [V] – Alliance partner • Alliances are critical in marketing to specific segments • Provide differentiation • Make mobile applications appealing • Open new channels • Recognise strengths of each partner

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