Aldi Enters MVNO Market in Austria

Austria

In a report first published by Reuters, Hofer, the Austrian arm of German discounter Aldi, will launch a new mobile telecommunications service which will be cheaper than other new market entrants, it said on Tuesday, increasing price pressure at a time when competition is set to rise.

Around 16 new entrants will be allowed to liven up Austria’s telecoms market as mobile virtual network operators (MVNOs) as part of regulatory conditions in the wake of Hutchison Whampoa’s acquisition of Orange Austria in 2013.

MVNOs pay for using capacity on the infrastructure of other telecoms service operators. Renting out infrastructure to newcomers can increase competition but can also bring in additional income for existing providers.

Prices have increased about 20 percent since the deal and regulators had singled out Hofer as particularly well-placed to dampen down prices, not least due to its large retail network of around 450 branches.

Discount stores like Aldi have been experiencing huge levels of growth in their core business areas over 2014 and a move into the Austrian MVNO market could raise some eyebrows as to their intentions elsewhere like the UK. As the stigma around shopping in discounted stores subsides the big supermarkets in the UK are probably starting to sweat a little.

Earlier this month, competitor UPC, owned by Liberty Global , launched a new mobile service as an MVNO using the network of Hutchison Whampoa’s unit Drei, with offers starting at 14.90 euros per month.