Europe Market Perspective / Vol. 8, Issue 28, Edition 9
Pyramid Research, Inc, September 2008
Virgin Mobile’s Aggressive SMS Pricing Strategy in France Transforms SMS and Voice Usage Patterns
On August 27, 2008, Virgin Mobile France announced that it would be signing its millionth subscriber over the next few days. Virgin Mobile launched in France in April 2006; it is owned by Omer Telecom (which also owns Breizh Mobile, the first MVNO in France and the only one offering services in the Bretagne region), which is a joint venture between the Virgin Group and the Carphone Warehouse. It uses Orange’s network and is the largest MVNO in France; its main differentiating factor is its low-cost SMS offers. With other operators responding similarly to remain competitive, SMS usage in France is booming.
As Virgin increases its share of the market and continues to offer attractive prices, operators and MVNOs will be forced to drop their prices. We believe that Virgin’s aggressive customer acquisition strategy will have a long-term impact on the market, resulting in lower voice and text prices, increased penetration and potentially further consolidation in the medium term. As a result, network operators could react by no longer selling through the Carphone Warehouse stores.
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