Lycamobile wants to shake up Canada's mobile market

lycamobile (Photo credit: osde8info)

By Rita Trichur, The Globe and Mail
Monday 23 July 2012
U.K.-based low-cost international calls specialist in talks with a number of potential Canadian network operator partners.
European telecommunications provider Lycamobile is planning to shake up Canada's C$18-billion wireless market with a new service aimed at immigrants and other ethnic consumers who regularly talk and text with family and friends living overseas.

Headquartered in London, Lycamobile sells low-cost international mobile calls. It has roughly 20 million customers in 16 countries, including Britain, France, Germany and Australia. The company was established in 2006 with an eye to serving expatriate communities--a multilingual niche market that numbers at least 250 million people around the world.

Lycamobile's goal is to be in 25 countries by the end of 2013, and Canada is a market in which so-called ethnic consumers wield increasing spending power.

Immigrants are expected to comprise more than 22% of Canada's population by 2017, with visible minorities, such as Chinese and South Asians, making up more than 50% of the population in cities like Vancouver and Toronto by that year. As a result, companies ranging from banks to retailers are tailoring products and services to court ethnic consumers.

Lycamobile Group CEO Milind Kangle said there is pent-up demand for more affordable services that allow consumers to make high-quality and frequent international calls and texts from their mobile phones. Immigrants often keep in daily contact with loved ones around the world, he said, but resent the inconvenience of being tethered to their land lines and webcams, or having to fumble for international calling cards that sometimes provide spotty connections.

"This is a lifeline service. We believe that our customers should get the same quality connection as any other customer would get in any other part of the world," Mr. Kangle said. "And we believe that the communication should be affordable--as in they should be able to make daily calls without having to feel the pinch in their wallet."

As a "mobile virtual network operator," or MVNO, Lycamobile does not own spectrum or cellphone towers. Instead, its business model is based on agreements that allow it to lease space on an existing carrier's network. Retailers such as Loblaw Cos Ltd. and Petro-Canada offer wireless services under MVNO deals.

Lycamobile is currently in talks with a number of Canadian carriers. Mr. Kangle declined to provide specifics due to confidentiality agreements, but the company is looking for a Canadian partner that uses GSM network technology.

Rogers Communications Inc. is Canada's biggest GSM-based carrier and is also considered an industry leader with respect to MVNO partnerships. The Toronto-based carrier has signed just less than 20 of those MVNO deals and operates a national wireless network.

BCE Inc. and Telus Corp. also support MVNO partnerships. Both could potentially partner with Lycamobile, but their newer shared network may have trouble supporting older GSM-based handsets.

Lycamobile, which recently opened an office in Toronto, is aiming for a Canadian launch this year. Although it plans to provide a national service, it will initially focus on major urban centres like Vancouver, Toronto and Montreal, offering unlimited and pay-as-you-go plans.

"We will target, of course, the bigger communities--the Asian communities, the Chinese communities, the Indian communities and what have you. But typically Lyca's approach is not to exclude any particular community," Mr. Kangle said.

To use Lycamobile's service, a consumer needs an unlocked GSM handset. She would then insert a Lycamobile SIM card and power up her device. Although the company does not sell handsets, Mr. Kangle says most consumers have at least one old handset lying around at home, adding availability of devices has never been an issue.

Zunaira Anderson, a 28-year-old resident of Woodbridge, Ont., knows firsthand the high cost of using mobile phones to keep in touch with her family and friends in Pakistan. She calls her mother every day. Although she uses free Web-based services like Skype, she also spends hundreds of dollars each month to call overseas on her Internet-based land line and her cellphone.

"I make the calls and he gets the shock," she says of her husband, Chris Rayan Anderson, who manages the bills.

"You feel empty if you don't talk to your parents. It's like our ties are so strong. We're so strongly in touch with each other," she said."I have to be in touch with them all the time. You know, when your parents are older, you are kind of more scared and you want to stay in touch more."

Winnipeg resident Hemant Shah is also hunting for cheaper alternatives for international calls. As an international marketing consultant, he frequently calls India, Saudi Arabia, Russia and a variety of West Asian countries from his mobile phone.

"It is not only keeping in touch with the family, but it is a business purpose also," he said of his smartphone. Although he often hunts for Wi-Fi hot spots when travelling, that approach is not always convenient.

"We are hooked up with the cellular phone today. Part of life has become a BlackBerry or iPhone. It has become a necessity of life."

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