HMD Global, which manufactures Nokia (opens in new tab) smartphones under licence, is to launch a Mobile Virtual Network Operator (MVNO) in the UK.
The company plans to offer bundles of calls, texts and data to customers when they purchase a new handset, including the six new Nokia devices (opens in new tab) it unveiled earlier this week.
By offering customers the opportunity to purchase airtime and a new phone at the same time, HMD hopes to simplify the transaction and increase its margins by bypassing traditional operator channels.
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“HMD Mobile is built on the foundation of trust, simplicity and flexibility where you only pay for the features you will use every day with no fixed-term subscriptions or premiums,” said Janne Lehtosalo, VP of Services, HMD Global. “This momentous launch presents our ambition to become the ultimate one-stop-shop for all your mobile needs.”
MVNOs sell airtime to customers but do not operate their own radio equipment. Instead, they use networks operated by one of the four major operators (EE, O2, Three and Vodafone) to power their services.
Some, such as Sky and Virgin Media, operate MVNOs to complement their other communications services but others, such as Giffgaff and Tesco Mobile, offer aggressively priced handset and SIM-Only deals to win market share.
HMD Mobile is seemingly not an attempt to compete with other UK operators but instead believes the potential gains will more than compensate for the costs of operating an MVNO. The service builds on HMD Connect, a global roaming platform for businesses in launched last year. The UK launch of HMD Mobile is planned for April and other markets are set to follow.
“The growth in online sales as a result of the pandemic has seen a shift in where phones are sold and being able to marry airtime with the device and offer the combined package at a single price will allow HMD Global to take a slightly different approach to rival smartphone makers,” said Ben Wood, chief of research at CCS Insight. “Given that a growing proportion of its business is coming from direct sales, for example 10% of sales in the UK, it makes sense to try a different strategy.
“By bundling a mobile phone with airtime and offering a signal predictable price for the phone and service, HMD Global is likely hoping that it will give it a competitive edge when selling its phone directly to consumers in the highly competitive mid- and low-tier smartphone segments.
“[HMD Mobile] could also be appealing to business customers where HMD Global is selling fleets of devices to businesses that want a single supply deal or the ability to procure ‘smartphones as a service’ with predictable monthly or annual payments.”
“Although it’s the first time I’m aware of a mobile phone maker becoming an MVNO, this is not the first time we’ve seen this approach in the tech sector. PC makers have also gone down this route, striking MVNO deals so they can bundle airtime with 4G and 5G connected laptops. It seems likely HMD Global has decided it can make a similar approach work for smartphones.”
HMD Global has made Nokia devices since 2016 and has shifted more than 240 million devices. It believes it can carve out a niche in the mid-range segment of the market because it is a European manufacturer with an emphasis on affordability and security and with a diverse range of handsets. The company secured major investment last year to fund its expansion.
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