Gamma Telecom is threatening to move its MVNO deal from Three to Vodafone, leaving Three’s MVNO strategy hanging in the balance.
Crisis talks will be held between Three and Gamma Telecom this week to determine the future of the MVNO, Gamma Mobile. The talks were called after Gamma informed Three’s MVNO team that it was in discussions with Vodafone.
A source said: ‘Meetings will be held between Three and Gamma Telecom later this week to discuss the future of the MVNO.’ He added: ‘It is not off – Gamma has had another offer but they are still listening to Three’s offer.’
If Three loses Gamma it will deal a body blow to its MVNO, as the deal was seen as a new route into the high margin SME market for the operator.
Any deal Gamma Telecom cuts with Vodafone will also raise questions about the future of XLN Telecom’s MVNO with Three, which connects via Gamma Mobile.
Phil Kendall, director of global wireless at Strategy Analytics, said Three’s network coverage was its Achilles heel.
‘The challenge Three always has is its network coverage. It has done a huge amount to improve this but if it can’t offer to match its rivals’ coverage, it is an easy choice to go to someone who can provide greater coverage. And in the b2b market, although price is important, coverage is usually at the top of the average company’s wishlist.’
Gamma’s resellers have become increasingly frustrated by customers’ reluctance to sign up with Three, sources said.
One dealer said: ‘As soon as the customers knew Gamma Mobile’s network provider was Three they would lose interest. It wasn’t a selling point.’
Gamma Mobile, which was set up in January 2008, was Three’s first MVNO deal and part of a wider strategy to grab share in the b2b market.
Under the wholesale deal Gamma Telecom offered an own-branded business mobile voice and data service using the Three network. The service targeted SMEs, harnessing Gamma Telecom’s 550 plus independent resellers to sell Three b2b connections via the MVNO.
A Three spokesman said: ‘We cannot comment on ongoing commercial negotiations.’
Vodafone declined to comment, while Gamma was unavailable for comment.