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Upwardly Mobile?The Challenges for Ireland’s Mobile Sector
Solutions for Virtual Mobile Operators
19th May 2003
Virgin Mobile – Why did it happen?
Virgin saw gap in market for consumer champion and youthful brand
– Little perceived difference between networks’ product, brand and user imagery, except Orange
General sense of lack of innovation, high costs, loaded with catches and stings
Opportunity for ‘white knight’ trusted brand
Virgin Mobile UK - Overview
Launched in UK in November 1999
Joint-venture between T-Mobile and Virgin
£100m shareholder investment, £115 debt financing in October 2000
UK’s first MVNO, now world’s largest
First consumer brand move into UK mobile industry
Virgin brand ethos
Innovation
Challenge
Quality
Value for Money
Fun!
… in the way we provide services to customers… in the way we work together… in the way we work with our business partners
Virgin Mobile created a proposition with personality
Consumer focus – targeting 16-34 yr olds
One tariff, no peak rates, more you use the cheaper it gets
Pay any way you like: pre-pay (with non-expiring vouchers) or pay monthly
No contracts to sign – we’re easy-going!
VirginXtras (VAS) on every phone, voice portal
Friendly and easy to access Customer Service
Virgin Mobile Economic Model is Key to Success
MVNO model has low capital intensity
Outsource partner management
Brand marketing efficiency
Low operating cost base – designed for consumer market economics
Prepay proposition highly cash efficient
Economic Model It Works!
• From growing start-up company in 2001 to strong bottom line results in 2003
• EBITDA achieved alongside fast customer growth
QUARTERLY EBITDA
Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03
EB
ITD
A
Strong Customer Growth and Market Share
Market Share Performance
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Q3 '99 Q4 '99 Q1 '00 Q2 '00 Q3 '00 Q4 '00 Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02
Shar
e of
Net
Add
s
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Mar
ket S
hare
% market share
Virgin Mobile % share of net adds
Best in class ARPU
Operator Date reportedAnnual No Line Rental
ARPU
Virgin Mobile
Orange
mmO2
Vodafone
Dec 31 2002
Sept 30 2002
Dec 31 2002
Sept 30 2002
£136
£124
£117
£121
2002 Performance Highlights
938k net additions, subscriber base up 65% to 2.38m
Revenue increased 65% to £288m
EBITDA of £16m, 37% better than plan
Over 90% of customers woulddefinitely/probably recommend Virgin Mobileto friends
2003 – “The business model comes of age”
Virgin Mobile The Outlook – Making money from higher bandwidth
High potential of our customer base - culturally open to using new services– person-to-person communication (voice, text, chat, picture
messaging, etc)
– Sport, fun, sex, personalisation
A brand that already provides consumers with entertainment, music, travel, and banking
Business model based on what we do best– Exciting service experience – “its show business”
Virgin Mobile The Outlook – UK and Beyond
UK business at the ‘tipping point’– Concept proven
– Growth accelerating despite slowing market
– Financial strength to develop further
Becoming established outside European arena– US
– Australia
Virgin Mobile is the ‘hot property’ in Europe– Courted by numerous players
– Market share opportunity for incumbents
– VM not bound by geography and licenses
