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Vodafone has turned its sights on the international community in the UK:

Pre-pay customers will be able to make the 5p per minute calls from the UK to landlines in China, Croatia, Czech Republic, Hong Kong, Hungary, India, Lithuania, Latvia, Nigeria, Pakistan, Poland, Romania, Russia, Slovakia, Thailand and Turkey. Calls made to mobiles in these same countries will cost 15p per minute.
The approach is spot on: no special MVNO with limited handsets and distribution, no special tariff plans – just a normal prepaid tariff option with calls home cheaper than calls on UK networks during the day (30p/minute) and slightly more expensive than calls in the evening and weekend (10p/minute)

The currently UK MVNO which targets the International Community is the Carphone Warehouse subsidiary, MobileWorld, which provides service to all the Vodafone countries (except Nigeria) and is significantly more expensive on fixed line calls and mostly more expensive on mobile calls than the Vodafone tariffs.

For an overall mobile market fully penetrated this is a significant play: there are estimated to be between five and seven million people from international communities living in the UK. MobileWorld themselves have around 500k users.

The days where MVNOs can target a particular niche and expect it to be too small for the MNOs to compete in with has long gone. In some other countries, the MNOs themselves are setting up MVNOs to target international communities. I think this approach is flawed, it is better to invest MVNO set up costs on expanding sales distribution and investing in co-op marketing with specialist dealers. It should be remembered that every prepay customer of today is possibly tomorrows heavy contract customer.

While we are speaking of distribution, it looks as if the big non-specialist retailers are getting backing into the UK prepay market with a vengeance. According to MobileToday:
Mobile understands that Woolworths saw its sales grow by almost a fifth last month, while Argos has overtaken Tesco, since the publication of its latest catalogue and is now the number two in the market for prepay sales.

Operators are also willing to back non-specialist retailers because they have improved their systems. Argos, once a soft target for box breakers, has improved its processes and has become a favoured acquisition tool for operators.
I’m not so sure such confidence is justified: I can already imagine a box-breakers Christmas Cracker with mobile operators chasing market share, non-specialists cutting margins to the bone to get the punters in the door for Christmas shopping and the non-specialists not having the time to stick with their “processes”.

Knowing how Carphone operates, the traders in Acton will already be scratching their heads dreaming up a new niche for their MVNO and a counter thrust to keep prepay market share.