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MNF moves into 4G mobile with Telstra Wholesale deal

The VoIP and cloud telco provider will begin offering mobile services across 3G and 4G after signing a deal with Telstra Wholesale, with the CEO again pointing towards mobile as an NBN bypass.
Written by Corinne Reichert, Contributor

Australian retail and wholesale voice-over-IP (VoIP) provider MNF Group has announced signing a mobile virtual network operator (MVNO) deal with Telstra Wholesale, allowing the telco enabler to move into 4G and 3G mobile offerings.

MNF, which rebranded from its previous name of MyNetFone late last year, said the offering would allow it to offer a "complete communications solution".

Mobile services will be offered across its Domestic Wholesale business now, with mobile services to be added to its Domestic Retail division later in FY17.

MNF's mobile service will operate across its proprietary iBoss platform, allowing new mobile players to go to market within four weeks and activating SIM cards in just seven seconds.

Rene Sugo, CEO and co-founder of MNF, which also provides telecommunications software, said the National Broadband Network (NBN) has "stimulated" the mobile industry, as the NBN's connectivity virtual circuit (CVC) charge is so high as to preclude smaller telcos from entering the fixed-line market, leaving mobile as the other big opportunity.

"With more consumers bypassing the NBN and turning to 'mobile only' as the alternative, we wanted to offer iBoss customers a go-to-market solution for reaching this growing consumer segment," Sugo said in a statement to the ASX.

"For us, it's not just about selling the services. Our iBoss mobile enablement platform provides the deep integration, automation, and self-service capabilities to deliver a truly value-added solution that new market entrants are looking for."

MNF's iBoss platform will thus enable smaller, non-telco players to enter the market quickly and at lower cost and risk, bringing more competition to a market dominated by big telco companies.

"In a nutshell, if you're a non-telco big brand, you are going to stay away from the NBN for the foreseeable future ... it's too risky right now for non-telco players to enter the NBN market," Sugo said at the CommsDay Summit in Melbourne on Tuesday morning.

"How will non-telco brands become the dominant force in telco? ... NBN is the fixed-line network that mobile operators needed to stimulate more demand in mobile.

"I believe we have cracked the big brand formula for telco: Thanks to our iBoss platform, we can now give non-telco brands a low-risk, quick-to-market solution. We expect to see a lot more micro MVNOs hit the market and change the dynamics of the telco market."

MNF was founded in 2004, and listed on the ASX in 2006. In July 2014, it acquired the business and platform of iBoss, a wholesale telco enabler, for AU$1.4 million. Earlier in 2014, iBoss' customer base had been saved from entering voluntary administration when it was bought out by Vocus Communications.

Glenn Osborne, Telstra Wholesale executive director of Sales, said the iBoss enablement platform has "a long history of interoperating with Telstra". Telstra opened access to its 4G network to MVNOs AldiMobile, Woolworths, Telechoice, and Better Life in April.

Sugo has previously said that instead of simply criticising the NBN, his company is seizing the opportunity to launch products and services aimed at the gaps left in the market by the NBN's lack of technological innovation in the communications sector.

Earlier this year, Sugo argued that the NBN risks failure if it does not change its wholesale pricing structure by removing CVC pricing and reducing its points of interconnect (POIs), and will continue to suffer from low uptake for two reasons: Wholesale pricing and the mobile "NBN bypass" being offered by Telstra, Optus, Vodafone Australia, and TPG.

In April 2015, MNF also bought New Zealand telco Spark's international voice business, Telecom New Zealand International (TNZI) for NZ$22.4 million. MNF in June announced the completion of this purchase after receiving approvals from the United States government.

TNZI sells voice, data, mobile, and digital services throughout Europe, North America, Asia, and Oceania.

In March, MNF announced that it would also be constructing a nationwide voice network in New Zealand through its IP voice communications provider Symbio Networks, which it will wholesale to service operators and over-the-top (OTT) providers.

MNF said it identified a gap in the market left by New Zealand's bigger telcos, which are choosing to occupy themselves with growing their own retail networks rather than developing the wholesale layer to lease off to the many low-cost OTT operators that are entering the market.

In August, MNF announced its financial results for the 2015-16 financial year, reporting a net profit of AU$9 million, up 25 percent from the AU$7.2 million reported in June 2015.

MNF saw earnings before interest, tax, depreciation, and amortisation (EBITDA) of AU$17.8 million, up 46 percent year on year from FY15's AU$12.2 million, on revenue of AU$161.2 million, up 88 percent from AU$85.7 million.

MNF operates in three segments: Australian domestic retail; Australian and New Zealand domestic wholesale; and global wholesale. The first contributed AU$28.917 million in revenue, the second AU$30 million, and the third AU$110.275 million.

MNF's total domestic retail residential subscriber base was 109,000 as of June 30, with its DSL base declining to 13,504 services in operation (SIO) and its VoIP base declining to 91,369 SIO due to migration of customers to the NBN.

MNF said it expanded its London point of presence earlier this year, completed upgrading the Los Angeles point of presence last month, and concluded the first stage of construction on the Hong Kong point of presence so it will be "operational soon".

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