Lebara Mobile has announced that it has seen a revenue increase of 105% over the last year, highlighting that despite a tough economic climate, ethnic MVNOs have staying power and the ability to attract customers.
A wide variety of MVNO models have emerged in the market over the last few years. Companies such as Giffgaff, Tesco Mobile and ethnic MVNO Lycamobile have made their mark on consumers and look set to grow even further in 2010.
The international calling card market is currently worth Â£500m and is moving towards mobility, according to an Ofcom report.
Lycamobile's success supports Strand Consult CEO John Strand's view of MVNOs. He says: 'There is no doubt about it, across the world there are three successful MVNOs: supermarkets, ethnic and web-based, no frill solutions. All other MVNOs have challenges.' And there is now an increasing trend for operators to launch MVNOs either directly or through mobile virtual network aggregators.
During the course of 2009, 3 launched a service with X-Mobility, Orange partnered with aggregator Transatel and T-Mobile teamed up with ethnic MVNO Vectone Mobile.
The creation of Vectone means there are now four key ethnic MVNOs in the UK market with Lycamobile, Lebara, and Nomi Mobile.
The increase in the number of MVNOs targeted at specific market segments raises the question of whether there is room for all of them - which would explain why Lebara has stepped up its focus on marketing over the past year and continues to concentrate on brand awareness.
The MVNO recently partnered with Eurosport and started its first TV advertising campaign during the African Cup of Nations 2010.
Both Lycamobile and Lebara secured key deals in 2009. Lebara COO Tim Wort believes that distribution is another factor that can lead to success in the ethnic market.
He says: 'We have worked on distribution and geographically extending our network outside London to the Midlands and north of England.'
Both Lebara and Lycamobile have secured deals with major retailers including Tesco, WHSmith, Asda and Superdrug. But even though the MVNOs are taking similar approaches to the market from a distribution and marketing perspective, Wort believes there is still plenty of business available.
He adds: 'We operate in a competitive market and it helps us to be even more effective. We are generally regarded as offering outstanding value and customer service.'
Strand also has a positive outlook on the future of ethnic MVNOs and believes success lies in targeted segmentation of the market.
He says: 'The UK market is multi-ethnic and we will probably see MVNOs going for one segment in the future. For example, in Germany there is one MVNO addressing the Turkish segment exclusively.'
And as the MVNO market develops, Lebara believes the strength of the company and its offering will be supported by technological and customer service developments.
Wort says: 'We have invested heavily in customer service and in technology to deliver better service.'
Over the course of the next year it will be a case of the MVNOs differentiating themselves from the crowd, which could lead to increased segmentation in the market. In the mean time, it will be difficult to say which company will lead the pack.
Where the MVNOs operate
Lebara Mobile: UK, Australia, Denmark, Germany, The Netherlands, Norway, Spain, Sweden, Switzerland
Nomi Mobile: UK only
Lycamobile: UK, Belgium, Denmark, The Netherlands, Norway, Sweden, Switzerland
Vectone Mobile: UK, Austria, Denmark, The Netherlands, Norway, Spain, Switzerland