Virgin Mobile exits Singapore

  Virgin Mobile, known for its splashy advertisements of half-naked models, has decided to drop out of the mobile phone race in Singapore after barely a year
July 8, 2002
By Irene Tham,

THE company's shareholders, Singapore Telecommunications (SingTel) and Richard Branson's Virgin Group, announced their intention in a statement today, July 8, citing weak market conditions in the country.

Virgin Mobile does not build physical mobile networks but buys airtime in bulk from existing operators for resale.

"The Singapore mobile market is one of the region's smallest and most mature--with a large number of existing players relative to its population and very little growth," said Jonathan Marchbank, Virgin Mobile Singapore managing director in the statement.

"As a new operator, we're feeling the full impact from operating in a competitive environment aggravated by the prolonged economic downturn," Marchbank said.

Approximately 73 percent of Singapore's 4 million population own a cell phone. The island's fourth mobile phone operator debuted last October with much fanfare, sinking about US$100 million into call center solutions and retail outlets, among others.

Sandra Ng, IDC Asia-Pacific vice president for Telecommunications Research, attributed Virgin Mobile's retreat to Singapore's saturated mobile phone market and customers' inertia.

"Virgin Mobile should have realized that it's not easy to move subscribers from one operator to another... subscribers won't easily budge for savings of S$10," said Ng.

Singapore's main mobile phone operator, SingTel, has 1.5 million subscribers, followed by MobileOne and StarHub.

Virgin Mobile's 30,000 customers will have until Aug. 9 to decide if they want to retain their phone numbers--an option which involves an account transfer to SingTel.

The company's 105 employees in Singapore, including Marchbank who was recruited two months ago, will be laid off by October, Virgin Mobile spokesperson Lauren Boulet told CNETAsia.

In late May, the cellular operator disbanded its Asian management team headed by Chief Executive Ross Cormack to "cost-effectively" expand its services in the region. It has since scrapped initial plans to expand to 10 Asian markets, including Hong Kong which was due to commence services last month, Boulet said.

She said Virgin Mobile will seek to develop a new blueprint for the company's mobile strategy in Asia, and that Graham Poston, its business development director for Telecommunications, has been tasked with the job.

Meanwhile, the company said its 220,000 customers in Australia won't be affected by the re-structuring. Apart from operations in the UK, Virgin Mobile recently marked its foray into the US through a partnership with Sprint PCS.