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Low-Cost MVNOs Shake Up Prepaid

Low-cost MVNOs, shaking up a stagnant European prepaid market, are threatening to grab as much as 15 to 20 percent of the available market share over the next five years, according to Strategy Analytics. Operators are finally waking up to this unpleasant truth, and are reacting by launching their own low-cost offers, like "Simyo," from E-Plus, which launched last week in Germany. However, the threat from no-frills players still looms large over the entire mobile industry. Although prepaid users now account for 60 percent of mobile users in Western Europe, these prepaid users are now being targeted by low-cost MVNOs offering significantly lower call rates. "Even though prepaid was the engine that accelerated mobile growth in Europe," said Sara Harris, Senior Industry Analyst at Strategy Analytics, "the majority of prepaid offers today are not only expensive, but they ignore customer demands for drastically lower-cost pricing. Thus, low-cost MVNOs have been able to storm into the market appropriating customers for whom price is king."

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