Telenet Extends MVNO Deal with Orange Belgium

Telenet Extends MVNO Deal with Orange Belgium

Telenet has agreed to pay Orange Belgium a minimum of €150 million (US $166.8 million) to extend their MVNO agreement through the end of 2018, from its previous end date of 31 December 2017, which had been agreed upon in 2012. Telenet has been running its mobile services on the Orange network since 2006 but now wants to migrate customers to its own network, which it has had since acquiring the MNO Base earlier this year. Telenet’s minimum payment covers the three-year period 2016–2018, but the actual amount paid could exceed €150 million due to greater network usage. Telenet has an option to extend the agreement for another six months, for a minimum €15 million (US $16.68 million). The agreement also puts an end to all outstanding legal disputes between the companies, including the judicial recovery of invoices under the full MVNO agreement.

Tarifica’s Take

Belgian cable provider Telenet acquired Base for €1.3 billion (US $1.45 billion) in February 2016 from KPN. Base is the third-largest mobile network in the country, with over 3 million subscribers, and with this deal Telenet said at the time that it expected to gain about €150 million in annual synergies and would invest €240 million (US $267 million) in the network. In April, the company revised the annual synergies estimate upward, to €220 million (US $244.7 million), and the amount of investment upward, as well, to €300 million (US $333.7 million). Considering this changed outlook, it makes sense for Telenet to prolong by a year its relationship with Orange, in order to invest more in the Base network and thus ensure that it is in the best condition possible when Telenet begins to migrate its approximately 900,000 MVNO subscribers to it.

Once that is accomplished, Telenet will be in a position of strength as it takes its place in the Belgian market as a full-fledged MNO with a maximally upgraded network. Telenet CEO John Porter said this week, “Next to giving us flexibility to ensure a solid customer experience during the migration from Orange Belgium’s network to ours, the agreement also foresees access to the latest technologies rolled out on the Orange Belgium network. In the following years, we will systematically transfer customers to the Telenet network.” Waiting until the optimal time by extending the MVNO agreement seems to be the best strategy for Telenet.