2/4/2009 2:54:00 PM
The Lebara/Lyca growth story
Here is a scene described to me several times in recent weeks: A sales agent for a virtual network brand comes into a store offering free Sim-cards to sell, but has a catch – hand over any Sim-cards from the other ethnic MVNO.
This completely unproven allegation has been made by several dealers, about both Lebara and Lyca Mobile – the two virtual networks gunning for the overseas calling market. There are also allegations that agents for the two companies are ripping down each other’s posters. Adverts are plastered all over buses and tubes, and now newsagent awnings, in areas around London with high densities of migrant workers and ethnic minorities.
The battle in the ethnic market is fascinating, fierce and sees two competitors focused purely on volume and market share. And it’s a battle that has been cranked up as it prepares to go nationwide. Dealers are paid between £2 and £5 up-front, with the promise of ongoing payments paid for the first top-up and another for the second.
The rapid rise of this sector, epitomised by Lebara exploding from a peripheral brand to taking 600,000 customers in the space of a year, is now hitting a critical juncture. Both Lyca and Lebara want to push beyond their existing market. Their Sim-cards are no longer secondary for customers, as both have cut prices for UK calls and offer a viable alternative to the main networks. But the worry is that, with both companies obsessing over the other, they risk cutting their throats to take market share.
It will be tough to secure improved wholesale rates with their respective network partners, but in the meantime, the battle is on to dominate and grow the sector.