Lyca Group CEO Richard Schafer backed operator consolidation such as a proposed Vodafone UK and 3 UK merger to drive consumers towards the MVNO segment, as he also highlighted an opportunity brought by the emergence of eSIM.
In an interview with Mobile World Live, the executive (pictured, left) said consumers in the UK were already reliant on the MVNO segment to “provide competitive tension”, noting the reduction in choice from any consolidation was not a positive for the market as a whole.
However, he added MNOs coming together would likely “drive a new wave of people to consider the MVNOs and to recognise the value they can provide”.
Schafer was appointed CEO at the company in 2023 after a stint as CFO. Lyca is headquartered in the UK, but also operates in a number of other markets. In its home country the MVNO runs on the EE network.
As is perhaps unsurprising, he is bullish on the prospects of the MVNO sector and his own organisation, which has apparently benefited from an increased public cost focus in the current economic climate.
“The cost-of-living crisis has ultimately resulted in consumers looking for better value long-term when it comes to essential services, including for their mobile contracts,” he added. “MVNOs like Lyca have always focussed on delivering a no-frills service and that offer has become more appealing, to more people”.
He notes Lyca’s current strategy surrounds increased customer acquisition in key markets, with current MNO subscribers the prime targets.
Rebrand
Lyca’s mobile business historically centred around the prepaid segment and provision of discount international calling, however in 2021 it undertook a rebrand to widen its userbase.
Late in 2023, the company’s UK business added pay monthly contracts to its options, a move Schafer said “puts us in direct competition with the big-four MNOs who currently hold 75 per cent of UK mobile customers”.
It has been promoting its services as matching MNOs and fighting on cost grounds, noting inflation-linked price rises which have been a significant consumer news story in the UK.
However, brands like Lyca also face challenges from MNO sub-brands targeting the same groups of cost-conscious consumers.
“The mobile landscape continues to be extremely competitive,” he added. “In the UK, the MNOs are going after traditional MVNO customer segments through both the creation of sub-brands and through MVNO deals.”
MNOs are going after traditional MVNO customer segments through both the creation of sub-brands and through MVNO deals
Richard Schafer, CEO Lyca Group
“The MVNO model is, however, well-suited to a competitive and highly penetrated market. It simply comes with the territory.”
eSIM-driven change
In terms of technology, the executive enthused about the prospects eSIM brings to the MVNO market, with the connectivity system presenting an “opportunity for real change”, adding it will “make it easier for consumers to seamlessly switch between networks”.
This, he indicated, may aid one of the key challenges for MVNOs of “persistent inertia” from consumers, who stay with their current providers for more than five years “even when they think they can get better value elsewhere”.
Looking to the future, he noted: “As the world’s largest MVNO, we have built a loyal customer base by delivering reliable, low-cost international calling. There is now a golden opportunity to extend that base by targeting a broader audience and we’ll do that by delivering against our three priorities of value, customer service and reliability”.
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