Vodafone, Lebara launch new pre-paid mobile service

Netherlands-based MVNO Lebara Mobile has partnered with Vodafone Australia to launch a new prepaid mobile SIM card service for local and international calls in the Australian market.

Under the partnership, Vodafone Australia will provide the network infrastructure for Lebara Mobile customers to make calls to numbers within Australia.

International calls will be passed to the Lebara Mobile international switched network based in the UK, then routed to their destination through partnerships with more than 100 carriers.

Recharge vouchers for the new service will be provided by electronic payment processing system provider e-pay Australia.

The MVNO will target Australia’s large migrant communities in cities such as Sydney and Melbourne which typically use calling cards for their international calls, Lebara Mobile founder and chief executive, Yoganathan Ratheesan, said.

By targeting this segment, worth some $250 million according to Ratheesan, Lebara would largely avoid cannibalising Vodafone’s local and international call services.

“Cannibalisation only impacts where there is a huge market share already owned by your partner,” he said. “If we can bring in $100 million from the calling card segment, and you cannibalise just 1-2 percent of Vodafone’s national traffic, there will not make a huge difference. Overall Vodafone as a company will benefit from this relationship.”

Offering international rates in the order of 9 cents per minute would move the MVNO away from the mobile phone sector and closer to the calling card sector’s pricing, Ratheesan said. However, this would also move it into competition with VoIP services such as those provided by Skype.

“With VoIP services such as Skype you generally need a PC and Internet and the same on the other side. The segment we are targeting is not that technologically advanced or as sophisticated as the general population and broadband penetration is low,” he said.

“Generally, the quality of service on a VoIP call is not up to that of a TDM mobile call where you have a direct interconnect. So it is a completely different product targeting different ethnic groups so they are different products not competing.”

Currently Lebara had some 40 staff developing its distribution network throughout Australia, Ratheesan said.

The company would also look to develop and launch a suite of pre-paid services, such as ethically or nationally targeted news services.

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