EasyMobile to close mobile phone service in UK

EasyMobile plans to shut its mobile phone service in the U.K. on Dec. 13, leaving its 80,000 customers to find a new service provider.

EasyGroup, owner of the EasyMobile brand, said it plans to relaunch the U.K. service, just not with original partner TDC.

EasyMobile is offering to transfer existing U.K. customers and their accounts to Carphone Warehouse Group. Customers who don't switch by Dec. 13, will be refunded their prepaid balances. Customers can also opt to end their agreement with EasyMobile and receive refunds for their prepaid balances.

The EasyMobile low-cost offering launched first in the U.K. last year, with plans to become available in 12 European countries. Mimicking a successful model spearheaded in Denmark, EasyMobile initially only sold SIM (Subscriber Identity Module) cards but no phones, and had no stores, selling exclusively online. SIMs are small smart cards used in GSM (Global System for Mobile Communications) phones to store subscriber account information. EasyMobile doesn't own mobile networks but resells service from network operators.

TDC, the former state telecommunications operator in Denmark that licensed the EasyMobile brand to deliver the service across Europe, blamed low customer growth in the U.K. for the shut down. However, TDC said that it has been more successful in Germany, where the service will continue uninterrupted, but under the new Callmobile brand.

EasyGroup blames a change of ownership at TDC for the problems, but a consultant who introduced EasyGroup to TDC says there have been other issues as well.

The problem was "Too many suits and too many MBAs," said John Strand, chief executive of Strand Consult, a consulting group in Denmark. Strand, who recommended four potential partners including TDC to EasyGroup when EasyGroup was looking to enter the mobile business, says that from the start TDC made a series of bad decisions. TDC executives often ignored Frank Rasmussen, the entrepreneur who crafted the original successful offering in Denmark and whose company owned a share of the EasyMobile business, about how to run the operations, Strand said. Rasmussen, who served as chief executive of EasyMobile, was subsequently let go, Strand said.

Earlier this year, a group of private equity firms bought TDC. EasyGroup says that after the acquisition, ventures outside of Denmark including those in the U.K. and Germany were starved of funding and their "management was purged."

Strand suggests that the "no frills" model can work in markets outside of Scandinavia. He points to simyo.de, a company modeled after Telmore that has around a million customers in Germany.

EasyMobile has around 130,000 customers in Germany, Strand said.

EasyMobile had also launched in the Netherlands but that service also closed this summer due to low customer numbers.