Branson’s way

In June last year, Richard Branson’s Virgin Group tied up with pan-regional mobile virtual network operator (MVNO), Friendi Group to create Virgin Mobile Middle East and Africa (VMMEA). The company had bases of operation in four countries at the time of the tie-up and recently announced winning a licence in Saudi Arabia and commencing operations in Malaysia. Richard Branson talks to Comm. regarding the scope of the MVNO opportunity in the region

Mikkel Vinter (left) and Richard Branson (right) are looking to establish VMMEA as the pre-eminent MVNO across the Middle East, Africa and South East Asia

“We have 20 years’ experience of developing mobile phone companies and it has been a good one,” Richard Branson told Comm. “We now want to roll out Virgin Mobile across the Middle East.”

The serial entrepreneur’s desires appear to be on a fast track, given that since Comm. spoke to Branson earlier in the year, Virgin Mobile Middle East and Africa has gone on to secure a MVNO licence in Saudi Arabia and expand operations into Malaysia.

At the end of June it was announced that VMMEA had become one of three companies to win a virtual telecom licence in Saudi Arabia. Five companies had bid for the Saudi MVNO licences and VMMEA is set to launch its service in cooperation with STC in the coming months.

Jawraa Lebara was identified as the second winning bidder, and is partnered by Mobily; while Dubai-based retailer Axiom Telecom was winner of the third licence and will purchase capacity from Zain Saudi Arabia.

Local companies FastNet and Safari were losing bidders.

"The aim of these licences is to improve the level of telecommunications services and information technology … and to contribute to lower prices, improve customer care, increase job opportunities for citizens and to stimulate competition," Saudi Arabia’s Communication and Information Technology Commission (CITC) said in a statement.

Saudi will become only the second of the six Gulf Cooperation Council (GCC) members after Oman to allow MVNOs. VMMEA also has operations in Oman, Jordan, South Africa, and previously operated a b-brand service in Saudi Arabia in cooperation with Zain.

VMMEA has established a formidable team of investors, partners and other stakeholders in the Middle East and is powering onto the next level of its development

Branson acknowledges that Virgin Group had a difficult start for its mobile telecom business model in the Middle East, following the cancellation of its permission to operate in Qatar in 2011. In 2010 Qtel (now branded Ooredoo) attempted a short-cut to MVNO licensing by introducing the Virgin Mobile brand in Qatar, without the brand having been granted the requisite operating concession.

Qtel attempted to pass off Virgin Mobile’s presence in the market as merely a marketing and branding extension, but the national telecom regulator ictQatar did not see it that way and within 18 months, the Virgin Mobile brand and its operations were shut down.

“Qatar was very unfortunate. One side of government didn’t seem to know what the other side was doing and we were given a relationship with one side of the government and the other side of the government objected to, and that set us back there,” Branson conceded. “Fortunately it was a small country and the countries that we are now going for are quite a lot larger.”

Quite a lot larger indeed. In the middle of September VMMEA announced the further expansion of its footprint by launching a new operation in Malaysia under its ‘Friendi Mobile’ brand.

Malaysia represents VMMEA’s fifth direct investment, cementing the company’s position as the pan-regional pioneer of the MVNO sector. With a growing customer base that has exceeded one million, and an ambition to double the number of operations over the coming years, VMMEA is on path to assuming a position among the leading regional telecom groups.

Mikkel Vinter, CEO and founder of VMMEA said: “We are very excited about the launch in Malaysia, as it is a big market with 30 million inhabitants and a vibrant economy. Malaysia has strong cultural, trade and tourism links with the Middle East markets where VMMEA has the bulk of our operations today, and with the footprint of VMMEA now covering Africa, Middle East and South East Asia, we are serving some of the fastest growing and most attractive mobile telecom markets globally.”

The operation in Malaysia will focus on multi-cultural customers who are looking for a better mobile service.

Friendi Mobile Malaysia has the support from a wide distribution network with 1,500 dealers across the peninsula as well as Eastern Malaysia, and the dealer network will be further expanded over time.

Friendi Mobile Malaysia is owned by VMMEA and its Malaysian partner, the Selangor state investment fund, Kumpulan Perangsang Selangor Sdn Bhd (KPS), leaving Vinter to describe the operation as benefitting from the global experience of the Virgin Group combined with a strong local partner.

VMMEA’s entrance into Malaysia as Friendi Mobile marks the MVNO’s first operational foray into South East Asia

“We have worked on the Friendi Mobile branded launch in Malaysia for a while, and feel there is a good opportunity for the Friendi Mobile proposition in that market,” Vinter told Comm. in relation to why VMMEA had opted to brand the operation Friendi Mobile as opposed to Virgin Mobile. “No decision has been taken on Virgin Mobile launch in Malaysia, but we have the right to launch the Virgin Mobile brand there as well if we want, and it might happen later,” Vinter added.

According to Vinter, while there are a number of licensed MVNOs in Malaysia, there are only a handful of active players, and he remains confident Friendi Mobile will participate successfully in the market. Friendi Mobile utilises capacity from U Mobile and has national roaming on Maxis’ network.

“With our new partners we have more fire-power and the Virgin brand is very strong, so I think we have a good shot at building a substantial company,” Branson said. VMMEA continues to look for opportunities to enter sizeable markets and appears well on course to achieving its ambitions.

MVNOs in Malaysia as of June 2013

Utilising Celcom’s network

Tune Talk (technically an MVNO, but 38% owned by Celcom)
XOX Com
Merchantrade
REDtone Mobile
Smart Pinoy

Utilising DiGi’s network

Happy Mobile/prepaid (technically an MVNO, but owned by DiGi)
Tron
SpeakOut Wireless (by 7-Eleven Malaysia)
Clixster
MY Evolution (Machine to Machine)

Utilising Maxis’ network

Baraka Telecom (MVNE, but started as an MVNO with DiGi)
IME Telco (formerly OKTEL)
Salamfone

Utilising U Mobile’s network

Sisteer (MVNE)
Enabling Asia (MVNA)
Buzz Me

Source: Tech Attack