Asda Mobile goes back to where it all started. What can Vodafone deliver for the brand?

I read the headline twice when I saw this news. But yes, it was true, Asda Mobile is going back to Vodafone.

I follow Asda closely – like a teacher likes to hear how a pupil succeeds in later life, I like to know how the brands I helped launch grow.

I was aware that Asda was reviewing its options and commercials but considering how poorly the move from Vodafone to EE went some years back, I was, to say the least, surprised by this return.

I’ve already been asked what I think is really going on, and I see a few possibilities here.

Asda has always struggled to grow to a size that befits the size of its retail business. Part of this can be attributed to its prepay only offer, but more recently it’s a symptom of a declining market now representing only 28% of all mobile subscribers. When it originally launched in 2007 it was almost double that.

Asda has also struggled to link Asda Mobile intrinsically to the grocery shopping experience. Sainsburys, which I also launched for Vodafone, did it through the Nectar scheme rewarding mobile customers with double points on their groceries. Tesco has done a similar thing and continues to link the categories it owns.

So why go to Vodafone, what materially changes? Well, what I hope to see is some exciting SIMO post pay propositions coming to market. There were hints of ‘digital experience’ in the announcement, and so we might see some innovative ways of linking the value you give in one category to another. It’s this sort of innovation that makes Vodafone attractive.

However, there is one major hurdle – migration. This can be painful at the best of times. Asda customers will have to do a SIM swap and that’s no mean feat on a prepay MVNO where Asda won’t have all the customer details.

It’s also likely to trigger some sizing up by customers. People are highly likely to re-evaluate the service they get and consider the other options. There are some great deals out there right now and Vodafone’s VOXI will be a big competitor.

Coverage is also likely to be a point of consideration. Customers who have coverage on the EE network won’t necessarily get it on the Vodafone network. That’s just the challenge of mobile coverage. This too will cause churn.The upshot is that if they manage to only lose 20% of the base in the migration they will have done EXTREMELY well.

Of course, an announcement like this doesn’t stand alone. There will be ripples. EE/BT, has so far ‘played 3, lost 2 won 1’. It lost its biggest wholesale customer Virgin to Vodafone, (who is then likely to lose it due to the proposed Virgin merger with O2 , then it won a five year extension of Utility Warehouse, but losing Asda will be a blow. Just goes to show you can’t ever rest in this business.

Overall, it drives a lot of work for EE/BT as it will need to put in place a team to support the mass migration of the two MVNOs. It could definitely be a distraction from winning new ones.

Overall, I expect to see yet more movement in MVNO wholesale deals. There are a few more out there to compete for. The prize that may just be up for grabs is Sky, triggered by the O2 and Virgin JV. It’s not beyond the realms of possibility, so I will be staying glued. And it’s probably enough of a reason for anyone else in mobile to stay tuned too.

If this shakes up your plans and you think renegotiation is likely then get in touch. We can help you understand the games being played and the moves you can make.

James Gray

About James Gray

James has over 20 years of experience working in the telecoms and retail industries. He is an expert in subscription-based business models, CRM, direct and indirect channel management and major proposition development and launches. He has held a number of Marketing Director and Consumer Director roles.