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Sky Mobile taking the fight to operators with MVNO

Alex Yau
December 14, 2016

New entrant claims power and reputation will help it achieve its long-term aims

Industry analysts have provided mixed reactions over Sky Mobile’s ambitious targets that state it will soon be able to go head-to-head with the UK’s four major mobile network operators.

The O2-powered MVNO’s plans were revealed to Mobile News last month by its director of converged products Vince Russell (pictured above), but he declined to give a deadline on meeting this target. Three is currently the smallest mobile operator by customer numbers with 8.8 million subscribers. Tesco Mobile is the largest MVNO having gained 4.6 million customers.

It will launch at the start of 2017. Initially it will be a SIM- only offering, with handsets available from spring. More than 46,000 pre-registrations have been made since launch details were announced at the end of October.

There are four major features with the first being ‘Roll,’ which allows subscribers to save any unused data from any billing period for up to three years. Second is ‘Mix,’which allows customers to upgrade or downgrade their data plans. Third is ‘Save,’ which waives any charges on minutes or texts for Sky TV customers. Lastly ‘Sync’ will allow Sky TV subscribers to watch Sky box shows on their smartphone.

There will be three year-long data plans; 3GB for £15 per month and 5GB for £20 per month. Non-Sky TV subscribers can add unlimited minutes and texts for an additional £10 per month.

Russell was confident Sky’s existing reputation in the broadband space, alongside its various USPs, would help it meet its aims. “We don’t see ourselves as any kind of niche. We can do everything an MNO can do. We can deliver all the services and even get on the same level as some of the bigger MNOs.

Trusted Brand

“Our customers recognise Sky as a brand they can trust for delivering good content. We’ve built a reputation around that and we will deliver on that with our mobile service. Sky doesn’t go into a market unless it can really deliver value.”

However, industry analysts have cast doubt on whether Sky Mobile will be able to achieve its targets given how tough the current market is. GfK technology director Imran Choudhary claimed Sky Mobile’s decision to avoid selling in traditional retail routes would be a major obstacle.

Sky UK and Ireland chief executive Stephen van Rooyen

“It was time to shake up the market and give customers a new way to manage their mobile plan”

He said: “To really compete with the MNOs, they will have to move into the contracted handset space. Customers still want to go into a store when purchasing a mobile phone, especially if it’s an expensive handset.

“The majority of activity in the operator space is through upgrades and having no store presence will prove difficult. It’s a very competitive landscape and Sky will have to convince existing customers to switch.”

CCS Insight operators principal analyst Kester Mann agreed. “Most people expected them to be alot more aggressive in their pricing. The service didn’t really live up to the hype some were expecting.

“1GB for £10 per month is not hugely competitive. The service will do really well, but in terms of really staking a claim and having a big push in the big MVNO market, We’ll have to wait and see. It can also be argued that having no retail presence will also provide a major challenge, especially with the popularity of Apple and Samsung products.

However, Canalys senior analyst Tim Coulling said Sky’s brand reputation and the rise of the SIM-only market gives it an advantage to achieve its aims.

In Ofcom’s latest telecoms complaints report published in September, Sky remained the least-complained about broadband provider with five complaints per 100,000. It also had this title in landline (five) and TV (one).

According to YouGov, market share for UK MNOs declined from 86 per cent to 72 per cent over the last six years. In comparison, share for the MVNOs doubled to 28 per cent in the same period.

“Sky’s already developed this strong reputation across all its other areas of businesses, so it’s likely it will use this to attract customers.It already has a strong customer base, so it doesn’t necessarily need to attract new ones from outside. It can achieve its goals by targeting those in its existing base.

“They’ve also got a base of customers from rivals they could potentially steal.”

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