As part of the recovery strategy of Vodafone Holdings KK, which used to be known as J-Phone, the unit announced it has created a separate unit to provide wholesale services to other Japanese mobile operators, so-called virtual network operators. VNOs lease capacity from another mobile operator’s wireless network to provide their own mobile service with their own branding.
Vodafone has so far been reluctant to go down this route, although in June it signed a VNO agreement with Extreme Sports in the UK. This deal was targeted at a niche market, mainly pre-pay users under the age of 24. Another VNO targeting the youth market is Virgin Mobile Plc, the UK’s fifth largest mobile operator, which rents capacity from T-Mobile’s infrastructure.
In the US, telecoms operator Qwest Communications International Inc resells Sprint’s mobile services. Additionally, the Walt Disney Internet Group recently announced it would launch a national US wireless phone service specifically designed for families. The service, called Disney Mobile, will also use the Sprint Nationwide PCS Network, and is slated for launch next year.
Newbury, UK-based Vodafone has long had a problem in Japan, despite it being a growth market. Its Japanese unit is currently the third-ranked mobile operator in that country, and has been losing ground to rivals including KDDI Corp and NTT DoCoMo Inc, mainly because it allowed them to gain an early lead in 3G.
To turn things around, Vodafone’s CEO Arun Sarin shook up Vodafone Japan’s structure and management. In February he appointed the Vodafone UK boss Bill Morrow to head up the unit as its president, and he also increased Vodafone’s shareholding in Vodafone Japan by 28.5% to 98.2%.
Commenting on the VNO announcement, Morrow said he believes there might be niche companies that would be interested in offering services over its network as mobile virtual network operators.
The government has asked that we see a little bit more competition here in Japan, and we think this contributes, Morrow told a news conference. There is a value that can be brought to the industry, local economy, and specific customers by having certain MVNOs or service providers come into play.
