Ecuador gives Virgin Mobile second chance to enter MVNO market

British billionaire Richard Branson has successfully lobbied the Ecuadorian government to overturn a ruling that ended the license for his mobile telecoms franchise Virgin Mobile.

Branson recently met with Ecuador’s President Lenin Moreno during the UN's Climate Action Summit in New York where he reiterated his interest in entering the market with Virgin Mobile, which is his mobile virtual network operator (MVNO).

In a resolution dated August 26, Ecuadorian telecoms regulator Arcotel had canceled Virgin’s 15-year license, granted on December 8, 2016, due to the company’s failure to launch operations within the stipulated period, despite several extensions of the deadline.

A statement posted on the presidential website confirmed the meeting between Moreno and Branson and said: “The country will have a fourth mobile operator, Virgin Mobile.” This effectively means scrapping the Arcotel resolution, according to a report by local daily El Universo.

The news was confirmed by telecommunications minister Andrés Michelena in a video posted on Twitter in which he also spoke of a recently announced digital connectivity plan that aims to attract investment and ensure 98% of mobile broadband coverage in Ecuador.

A TOUGH MARKET

Virgin Mobile has seen mixed success in Latin America since it launched the first franchise in the Chilean market back in 2012.

In Chile, the company’s market share has bordered around 1%, whereas the most successful markets have been Colombia and Mexico with market participation of 4.17% and 1.8%, respectively.

The only failure so far has been Peru, where Virgin sold its operation in 2017 with less than 2% of the market. Licenses received to operate in Argentina, Brazil and Ecuador did not result in market launches for different reasons.

The Ecuadorian market will not be easy for Virgin as América Móvil’s Claro brand enjoys strong domination with 52.7% of the country's 15.8mn mobile subscribers. Telefónica’s Movistar and state telco CNT command market shares of 28.2% and 19.0%, respectively.

Virgin will have to successfully negotiate the purchase of airtime from one of the three established network operators.

Branson and Moreno also discussed the idea of using only renewable energy on the Galápagos islands and the possibility of Branson’s airline Virgin Atlantic adding a route to serve Ecuador.

During the same summit, Moreno also met with Paula Bellizia, Latin America VP for Microsoft, to discuss the adoption of IT solutions to improve productivity, artificial intelligence, cyber security and education.