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Wednesday, October 24, 2007

Carphone: Yet Another MVNO

Carphone was in the news yesterday launching another MVNO onto the UK population.

If disclosure within Carphone’s fixed line services business is poor then disclosure within Carphone’s current prepaid MVNO’s, Fresh and MobileWorld, must rank as appalling. There are no publicly available statistics on churn, ARPU or SAC costs and in fact the metric used for determining what actually a customer is (eg 90 days of activity) is not even declared. In other words, it is just impossible to determine how the current MVNOs are performing.

It is therefore surprising that Carphone has actually launched a postpaid MVNO. I am of the impression that this is yet another step for Carphone in the direction of being a fully fledged Service Provider and away from being an independent retailer. It will be extremely interesting to see how much marketing effort Carphone put behind the new MVNO. I am surprised that Carphone say there is a gap in the market for shorter contracts, especially when Virgin Mobile tried shorter 6-month contracts and appear to have pulled pushing the deal. And anyway, if Carphone were so certain of demand for the 9-month contracts, they wouldn’t have launched 18-month contracts at the same time.

The other surprising aspect of the MVNO is that it is on Voda’s network and not on T-Mobile, who currently provide capacity for Fresh and Mobileworld. This MVNO deal in fact rather than being new could just be a reincarnation of the old onetel MVNO deal which has been lying dormant since Carphone acquired onetel. Also, I don’t think that it necessarily means the thawing of relations with Voda on the consumer distribution side. After all, Voda would be just complete morons to turn away some high margin wholesale business at very little risk to them. I would imagine however that T-Mobile would be feeling more than a little piqued and wondering why they haven’t got the wholesale business when they pay Carphone a lot more SAC’s than Voda and probably receive far less interconnect revenues from the AOL/TalkTalk fixed line operations.

All in all, an interesting development, but not one that means any fundamental reassessment of my bearish stance on Carphone is necessary.