More and More MVNOs Enter the Italian Market

I can’t help but notice the sheer number of announcements coming out of Italy about mobile virtual network operators (MVNOs). Italy has a mobile penetration rate well above 100% — there are more phones than people — but there still seems to be room for another MVNO.

Part of the reason for all this activity is a ruling by the Italian regulator that forced mobile network operators to open up their networks. They’ve all had to sign deals with companies looking to expand into the mobile market. The new players include telecom and Internet providers (FastWeb, Tiscali and BT Italia), supermarkets (Conad and Coop) and companies targeting ethnic communities (Astelit and Daily Telecom Mobile).

There’s more, but one MVNO in particular stands out for me.

PosteMobile is the mobile phone subsidiary of the Italian postal service, Poste Italiane. It launched in the last quarter of 2007 and seems to be doing well, with reports suggesting it has more than 200,000 subscribers already. It’s on course to hit its target of 400,000 subscribers by the end of the year and is apparently aiming for 2 million within three years.

It’s in a strong position partly because many Italians have bank accounts with Poste Italiane, and the MVNO is integrating these accounts into its services. It claims to have an advanced payment system that’ll handle current and future services. Subscribers can check the balance of their Poste Italiane accounts on their handsets. They can also transfer money, make Giro payments and top up their phone credit. In the future, they’ll be able to pay bills, send telegrams and make micro-purchases from handsets.

I feel this gives PosteMobile an edge over other MVNOs. It’s addressing the needs of its loyal clients, some of whom have had Poste Italiane bank accounts for years. I think it won’t be long before other operators follow suit and offer a greater range of payment and banking services.

Another interesting trend is the introduction of MVNOs focussing on ethnic communities by offering cheaper international calls and texts from mobiles. Many members of ethnic communities don’t have a fixed line, so they must be spending more than 20 euros a month on mobile calls. That strikes me as quite high — an opportunity not to be sniffed at. That’s why we’re seeing more MVNOs focussing on specific ethnic minorities, not just in Italy but in other markets (Lebara Mobile, for example, which offers services in Spain and in the UK).

In Italy, Daily Telecom Mobile is targeting people making calls to Hong Kong, Macao or Taiwan. It resells airtime on Vodafone’s network to offer mobile calls to these destinations for the price of a local call. Astelit uses 3’s network to provide mobile services (branded Life J) aimed at Ukrainians living in Italy. I think similar services for other communities will spring up, especially as Italy’s seen an influx of immigrants recently.

It’s remarkable to think that there were no MVNOs in Italy at the start of 2007, but there will probably be more than 10 by the end of this year. As the Italian mobile market is made up of a high proportion of pay-as-you-go users, the conditions are ripe for MVNOs to succeed. I think the key thing is to target your audience and offer clever value-added services, like PosteMobile’s done. Of course, not all MVNOs will survive. I think we’ll see consolidation in a couple of years from now, with mobile network operators acquiring the most successful brands.