Vodafone UK’s MVNO strategy is under question this week after MVNA partner Cognatel slashed staff numbers and announced it will only focus on larger scale MVNOs going forward.
In the same week Vodafone MVNO Ovivo closed down, raising questions about the future of Vodafone's smaller MVNOs.
The move marks a shift in Vodafone’s MVNO strategy away from smaller, niche MVNO partners to larger deals. It has also raised speculation that Vodafone could buy Cognatel, taking it in-house to run its MVNO operations.
Cognatel, which aggregates niche MVNOs for Vodafone, has halved staff numbers and closed its London office as part of its restructuring and said it will only work on larger MVNO deals with Vodafone UK in the future.
The focus on larger deals is part of Vodafone’s wider strategy to go for quality rather than quantity of connections. It follows statements from Vodafone chief Vittorio Colao questioning the value of wholesale to Vodafone’s business.
Last month he told analysts: ‘Conditions at which you wholesale have to be built in a way that allows your own retail pricing to be effective. If you give away contracts that allow re-staking, betting and strange things that completely undermine your price, then quite frankly, for 50 million, 60 million, 70 million per year, even 100 million per year sometimes, it’s not worth it.’
Catherine Haslam, Ovum senior analyst, said Cognatel’s restructuring could be linked to Vodafone’s changing MVNO strategy.
She said: ‘Vodafone wants to be far closer to their MVNO customers. They want fewer, better MVNOs who are true partners rather than MVNOs focusing on minutes, messages and megabytes.’
She raised the possibility of Vodafone acquiring Cognatel, pointing to Vodafone’s cash-rich position and ‘a strong trend for many operators to buy up successful MVNOs and turn them into their own sub-brands.’
Informa senior analyst Dario Talmesio said: ‘Vodafone is more cautious about what it is doing. It wants to focus on deals that make sense,’ he said, but added: ‘So long as wholesale does not represent a strategic threat it will continue to be part of Vodafone’s strategy.’
One MVNO source said: ‘Vodafone has decided smaller MVNOs are not adding enough value. This leaves the field open for (EE MVNA) Viacloud in this sector.’Cognatel CEO Mark Ashdown (pictured) confirmed the company had undergone a strategic review and ‘decided to focus on larger scale MVNOs both in the UK and overseas.’
He said Cognatel will continue to work closely with Vodafone in the UK, adding: ‘In light of this Cognatel has restructured the business moving our sales and operations from our London office to our headquarters in Milton Keynes which led to some redundancies from our London office.’
A Vodafone spokesperson said: ‘Vodafone remains committed to all of our wholesale partnerships and are fully supportive of any decision that Cognatel makes to shape its business to deliver against its plans for the future.’
Cognatel MVNO Ovivo shut down earlier this week (21 March) leaving customers without service.