Details of the venture are still sketchy, but it seems that the joint venture will take the form of a Mobile Virtual Network Operator in France, which will operate under the Virgin brand and use the mobile network of Orange SA, the mobile arm of France Telecom SA. More information is expected soon. Both companies are already virtual operators in the UK, where they use T-Mobile’s network.
Virgin Mobile started life in the UK in 1999, and besides its domestic market, it has separate units in Australia and the US. The Carphone Warehouse on the other hand currently has 200 stores in France, as well as an existing regional mobile operation in Brittany known as Omer. It is thought that the joint venture with Virgin Mobile UK will build on Carphone’s Omer service, which also uses Orange’s network.
The French regulator is keen to encourage the use of MVNOs in a bid to increase competition in France. The country is attractive to mobile operators because it is one of the biggest markets in Europe, but it has relatively few mobile operators compared to other major European markets. It also has penetration rates of about 80%, which is far behind that of other developed markets in Western Europe, where saturation levels sometimes top 100%.
The number mobile operator in France is Orange, with a market share of more than 40%. Second place is occupied by SFR SA (owned by Vivendi Universal SA), and third is Bouygues (owned by Bouygues Telecom SA, part of a French conglomerate that includes construction and telecoms operations).
In August, a report by the French fraud investigation office revealed that all three mobile operators were suspected of being guilty of secretly fixing their market shares and minimum prices. The official report was based on evidence seized during a raid in August 2003. It said the operators had begun to exchange confidential information about their market figures at monthly meetings as far back as 1997.
The DGCCRF report has been transferred to France’s competition authority, the Conseil de la Concurrence, which has notified the operators of the complaints under investigation. The competition authority is expected to rule on the findings by the end of this year.
