Amaysim is not going anywhere
Last year, Optus began the purchase of Amaysim for $250 million. Now, the telco have finalised the deal, snatching up the largest Mobile Virtual Network Operator in Australia (MVNO).
But Optus have also announced that Amaysim will remain a standalone MVNO, keeping them in the low cost market. This means Amaysim will remain active, and will likely operate just like it did prior to the acquisition.
However, Optus also launched a low-cost small mobile company last year – Gomo. The brand seemed to be a direct competitor to Telstra sub brands Belong and Boost, as well as Vodafone’s Felix.
With Gomo and Amaysim now under Optus, how does the telco plan on differentiating its MVNOs?
Amaysim dominates the MVNO market
The MVNO market itself has seen some huge growth over the years. Most of this is due to their business model – cheap, straight-forward phone plans. These smaller telcos resell the larger telcos’ networks, which cuts down the overhead and makes their low cost model easy to stick to.
But Amaysim’s progress in the market has been even more of a story. They are the largest MVNO in Australia, and the fourth largest telco in the country. The company already purchased OVO, the runner-up MVNO, as well as Jeenee, another popular MVNO. Those acquisitions made Amaysim even bigger, with an impressive 1.2 million subscriber base.
Optus purchased Amaysim, and launched Gomo
Amaysim has been on Optus’ radar for a while now. A couple of years ago, we reported that Optus was interested in purchasing Amaysim. Then late last year, the telco finally made the move, snatching up Amaysim for $250 million.
With the acquisition, Optus has gained all of Amaysim’s 1.2 million subscribers. In times like these when the major telcos have seen declines in subscribers, that’s obviously some welcome news for Optus.
However, Optus also made another move last year – they launched Gomo, a small mobile phone company or MVNO. This raises the question of what exactly Optus’ strategy is for the sub-brand market, particularly now that the telco has announced that Amaysim will remain a standalone MVNO, despite the recent acquisition.
What exactly is Optus’ strategy by keeping the Amaysim brand?
To straddle both the Mobile Network Operator (MNO – the major telcos) market and the MVNO market successfully, a telco would have to have a clear strategy differentiating its different brands and sub brands.
MVNOs are low cost operators that stay competitive with cheap, no-frills phone plans – something that the major telcos are traditionally not interested in. So for a major telco to step into the MVNO market, it would have to do so with the right strategy, differentiating its major brand from its sub-brands.
Take Telstra, for example. The major telco owns the MVNO Belong, and another MVNO -Boost – resells the full Telstra network. Each of the three brands have distinct strategies and goals to differentiate them in their respective markets. Telstra themselves are known for network quality and speed; their MVNO sub-brand Belong is a low-cost, straightforward postpaid option with data vault; and Boost is prepaid for the youth. Nice and simple, nice and clear.
Is Optus creating such a simple and clear differentiation strategy? So far, not really. What is the difference in Australians’ perceptions of the different Optus brands here? Optus is the typical major telco with a long list of mobile plans and other services to choose from. Gomo is the straightforward, no-nonsense sub-brand MVNO in their TV adverts. So where does that leave Amaysim?
With Optus opting to keep Amaysim as it is, there is hardly any unique factor to make the MVNO stand out. Remember Amaysim is the fourth largest telco in Australia, and has acquired other popular MVNOs to grow even bigger. That means Amaysim is quite big – hardly just a “sub-brand”, which then means its more comparable to Optus itself than it is different. Such a partnership could prove difficult in the long run.
Perhaps in the long run, Optus would have to keep some services from Amaysim in an effort to differentiate the MVNO from itself and Gomo. For example, Optus made its 5G network available to MVNOs last year. This would mean Amaysim may well become a 5G MVNO soon, blurring the lines between it and Optus even more. To keep Amaysim different, Optus might have to hold 5G plans for itself, making Optus the 5G brand while Gomo remains the no-frills sub-brand, and Amaysim cuts back some of its lineup and remains a low cost 4G sub-brand for now.