Woolworths launches Everyday Mobile

OPTUS has partnered with Woolworths to launch its the Woolworths Everyday Mobile offer. The new “white label” service was launched in August 2009 and focuses on taking a share of the low cost prepaid mobile market.

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Here is an extract from a recent release talking about Optus’ plans to expand its network and distribution through 3rd party an other relationships.

The No2 mobile company’s wholly owned youth-focused subsidiary Virgin Mobile has put a 50-store expansion on ice in recent weeks, cruelling plans by Optus to take on its faster growing rival Hutchison 3.

Optus however, continue to add about 100 company branded “yes” stores to its existing network of 103 shops.

The Australian understands that Virgin is well advanced with its plans, having shortlisted its two largest third-party retailers Telechoice and Allphones, to build and run the outlets.

The stores, which cost about $500,000 each to set up, will be joint ventures between Optus and the chosen partner in each case.

Optus consumer chief Mike Smith said the company would not comment on Virgin but the company would continue to expand its “yes” branded stores, most of which were owned by franchisees.

Optus has also been hit by the collapse of one of its biggest third-party retailers, the 72-outlet Strathfield Group, which was believed to be making about 500 new connections a week on the Optus network.

Despite these setbacks, the deal with Woolworths will add a new arm to the Optus distribution network and has the potential to shake up the network’s distribution models.

Late last year Woolworths denied in several media reports that it would move into mobile services, but The Australian understands the deal was signed in September.

Optus is building and operating the so-called MVNO (mobile virtual network operator) through what insiders described as a “white-label” arrangement using its new software platforms known intenally as Project Reitz.

Problems integrating with Woolworths’ IT systems had resulted in unexpected delays, sources said.

Optus declined to discuss its dealings with Woolworths but a source close to the project said the Woolworths-branded mobile phone service was months away from launching.

“Woolworths is considering a wide range of opportunities, which would provide additional value to our customers. Telecoms is one such opportunity that we’re considering,” a Woolworths’ spokesperson said.

According to sources close to the project, Optus will build the infrastructure and network systems while Woolworths puts the finishing touches on the systems that operate customer relationships and billing.

Once the systems integration is complete, shoppers will be able to purchase a mobile phone or recharge their pre-paid mobile service at their nearest Woolworths-Safeway store.

Woolworths’ MVNO plan mimics the 2003 move by giant British supermarket chain Tesco that has resulted in it accumulating more than 2 million subscribers to its service.

It is likely that Woolworths will adopt a similar MVNO business model to Tesco, offering discounts on handsets and prepaid charges when customers spend a certain amount at the supermarket.

It’s also expected that Woolworths will tie in its mobile phone offerings with its Everyday Rewards credit card program to grant customers free phone airtime or data based on spending at the checkout.

Woolworths at present awards customers fuel e-vouchers when they spend advertised qualifying amounts on their Everyday Rewards credit card.

MVNOs have been gaining momentum in Australia since Crazy John’s teamed up with Vodafone to launch its own branded mobile fleet.

Now Vodafone plans to expand its role as an MVNO provider in the coming year.

“It’s shaping up as a very active year, with a number of new MVNOs likely to enter the market,” Vodafone spokesperson Greg Spears said.

Following the collapse last week of one of Optus’s biggest third-party retailers, another of its major retailers plans to open another 18 shops this year, mostly in capital cities, TeleChoice chief executive Ehab Abdou said.

TeleChoice has more than 120 stores nationwide and Mr Abdou said the company registered 25 per cent sales growth year-on-year for the period ending December 31.

However, he declined to reveal specifics.

“The market is really healthy and business is good,” Mr Abdou said.

TeleChoice spent $6 million solely on brand marketing last year and expected to maintain or increase that amount as the business grew, he said.

“In the last three years we’ve been increasing our marketing budget. When we started we used to spend $3.5 million,” he said.

Mr Abdou said the market was not surprised to hear about Strathfield’s demise but declined to say how much business TeleChoice would gain as a result.

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