I bet the BT press office phones have been running hot since Virgin and Vodafone announced their deal. This is a huge story that will have a profound impact on the UK telecoms and MVNO market. For the first time in its 20 year history, the UK’s first ever MVNO is moving networks. (You’ll recall it all started with T-Mobile who merged with EE who became BT…)
I have to say I was surprised initially but actually there have been signs of change brewing. Looking back a couple of years the likelihood of this switch became much greater when Virgin moved to become a full MVNO with BT.
It was shrewd, but as anyone in this business will tell you there comes a time when things get a little close for comfort. There’s no escaping the fact that Virgin is now a major competitor for BT in broadband, fibre and TV. Maybe they felt that being that reliant on a key competitor was limiting their growth.
But if I was a betting man, I’d think there’s a wider game in play. Summed up by the words Liberty Global. Vodafone’s relationship with the group means that true growth and scale could be possible for Virgin in a way it’s never been before.
Big question then is, ‘what does this mean to the telecoms market and consumers?’.
For consumers it has to be good news. Virgin will have negotiated an amazing deal on their wholesale rates to move over. Plus, knowing how these things work, if there was any notion that BT was constraining progress at Virgin Mobile then the move will have opened up new opportunities.
When the move is complete (and it’s going to take time and a LOT of effort despite the full MVNO), we may see some very aggressive quad play offers come to market. Add 5G to the mix and Virgin Mobile is a strong contender for grabbing share. Be warned other operators.
For BT there’s no doubt that this will have a significant impact on its wholesale revenues and margins, reported as £200m annually. We could see them aggressively targeting existing and new MVNO businesses to make up the shortfall.
Considering the potential impact on the market now is a very sensible time for MVNOs to review their market benchmarking, and go over the ‘significant market event’ clauses in their contracts. There could be a big opportunity here.
It will be interesting to see if BT reacts by aggressively targeting the customer segments where Virgin is strong with offers from EE and BT Mobile to keep the value on the network.
But whatever happens, I think the UK telecoms market and in particular the MVNO market just got a whole lot more interesting, and it was pretty exciting before.
If this move is making you rethink strategy then the consultancy team at Graystone Strategy can help you carry out the right benchmarking exercises to assess the opportunities and threats that might emerge now, as well as develop market leading strategy. There’s plenty of MVNO info here, or drop me a line.
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