Virgin Mobile confirms Canada as its fourth port of call

31 Mar 2004

UK-based mobile virtual network operator (MVNO) Virgin Group yesterday announced that it is preparing to launch in Canada. Virgin will team up with Canada’s dominant wireless operator Bell Mobility, part of telecoms group Bell Canada, to undertake a nationwide rollout of services over Bell Mobility’s CDMA2000 1XRTT digital network. Whilst no launch date has yet been announced, the partners have said that they will each invest CAD70 million (USD52 million) in the start-up, with a national advertising campaign set to be unveiled later this year.

With mobile penetration at less than 50%, compared to the 80-90% average in western Europe, the Canadian market holds plenty of potential for new entrants and appears tailor-made for the likes of Virgin Mobile. The Virgin business plan has already proven to be an unqualified success in both the UK and US, and the Canada enterprise is likely to stick to the company’s formula of a single, straightforward pre-paid calling plan predominantly aimed at the youth market. Whilst all four of Canada’s major cellcos offer pay-as-you-go products, many penalise users for calling in peak periods or across networks. In contrast, Virgin Mobile does away with peak and off-peak distinctions, instead charging a set rate for the first period of calls each day (25 cents for ten minutes in the US; 15 pence for the first five minutes in the UK), and then dropping the tariff for the remainder of the day (to ten cents in the US; five pence in the UK).

Sources indicate that Virgin is expecting its Canadian venture to sign up between two and three million customers by the end of 2006. Virgin Mobile UK, a 50-50 venture with Deutsche Telekom, had signed up 3.64 million customers by the end of 2003, whilst Virgin Mobile USA, a joint venture with Sprint which was launched in June 2002, boasts of being the US’ fastest growing mobile operator having passed the 1.75 million subscriber mark earlier this month. However, the Virgin Mobile venture has not worked everywhere. Virgin Mobile Singapore closed down in October 2002 and its customers transferred to venture partner SingTel, just one year after its launch and having signed up little more than 30,000 customers. Meanwhile Virgin Mobile Australia, launched in partnership with Optus in October 2000, has so far struggled to make much of an impact in a competitive market, signing up 410,000 customers by end-2003. Following its Canadian launch it is widely believed that Virgin’s next target will be the Mexican mobile market, whilst China, India and South Africa have also been touted as potential future markets.

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