Pan-regional prospects

In the middle of January, Dubai-based mobile virtual network operator Friendi Mobile entered into an agreement with Zain’s Jordanian unit to launch services in the country. This marks the second country in the region, and the second that Friendi has been able to agree MVNO terms, suggesting the tide may be turning for mobile resellers in the Middle East

There had been some suggestion of a collusive approach to MVNOs by Jordan’s three main mobile operators, none of which were willing to pen an agreement with the country’s two MVNO licensees – Friendi Group and i2. Orange Jordan had always appeared to be the frontrunner in entering such an arrangement, with the company’s chief strategy office Philippe Vogeleer having given Comm. the impression that such a deal was imminent towards the end of last year.

The signing up of Zain as the host network for Friendi Mobile services in Jordan is significant for a number of reasons. One is the fact that as part of a wider group, signing a deal with Zain Jordan gives the MVNO the ear of other Zain entities, some of which are in strategically significant markets including Saudi Arabia, Nigeria and Iraq.

“It’s good news for Friendi to have an operator the calibre of Zain to endorse our business model and recognise the value we are able to bring to a market,” Mikkel Vinter, Friendi Group CEO said. “The mobile market in Jordan is a competitive one and we will face challenges, though I think our focus on specific market segments, which in some cases are under-serviced is the correct one.”

Another reason why this agreement is significant with respect to a market leader recognising that there may be pockets in a market that may be better targeted in cooperation with a MVNO partner rather than in isolation. This has long been the argument of Vinter and other MVNO proponents; that their role is not to erode value, but instead to mine further value out of market segments that established service providers may not able to address sufficiently.

Orange Jordan’s next move will be interesting to witness. i2, the Saudibased mobile phone reseller and wholesaler has faced a bleak time in the two years since it, along with Friendi, was awarded a MVNO licence in Jordan. Thus it seems unlikely that the company has the appetite to pursue such an activity should the  opportunity arise. So Orange will be left with no immediate prospect of MVNO partner in the short-term and will continue to have to develop it segments without the input of fresh ideas and branding. Jordan’s third mobile operator Umniah, already focuses heavily on the youth and money-conscious sectors of the market, and as such is unlikely to be a suitable candidate to tie up with a MVNO given the required wider margins to be able to support and sustain a reseller agreement.

“Lower ARPUs in Jordan are a factor we are aware of, but we remain confident in the business case that we have proposed, and even at those levels we believe there is tremendous potential for us to be successful,” Vinter says.

The addition of close to 200,000 reseller subscribers in Oman in less than a year has moved Friendi from being a proof of concept, to being a bona fide commercial reality, the workings and benefits of which are becoming increasingly evident over time. Vinter is satisfied that Friendi finds itself in the position of being approached by interested parties as much as it searches out opportunities of its own.

Friendi Group’s geographic region of interest remains the Middle East, South Asia and Africa and the MVNO has made no secret of its desire to participate in larger markets such as Saudi Arabia or India when such opportunities arise.