July 8, 2016

Amaysim takes on Australia

Amaysim’s low-overheads model was initially tested in several European markets, teaching it valuable lessons that enabled it to successfully set up shop in Australia’s highly competitive telco market.

Back in 2005, four German telco entrepreneurs got together with a simple, smart idea – to launch a mobile phone company offering low-price, pay-as-you-go subscriptions.

The result was Simyo, a wildly successful mobile virtual network operator that shook up the status quo in several European markets.

In a departure from the standard model of locking customers in to a two-year plan including a new handset, Simyo encouraged people to bring their own phone, buy a no-contract monthly subscription and self-manage their account online.

It was a model with low overheads, enabling the company to compete aggressively with established competitors and score a sizeable slice of the home user market in Germany, the Netherlands, Belgium and France. Its success spawned a slew of imitators and resulted in low cost providers collectively snaring more than a third of the mobile market across Europe.

Five years later, a sale to Royal Dutch KPN saw Simyo founders Rolf Hansen, Thomas Enge, Christian Magel and Andreas Perreiter team up with Aussie telecoms entrepreneur Peter O’Connell with a plan to replicate their success in another market they believed was ripe for disruption – Australia. They did a feasibility study and identified there was a real opportunity to come down here and shake things up.

Signing up a million Australians

By anyone’s measure, the team’s hunch has proved a sound one. Five years after setting up shop Down Under, their Aussie venture amaysim has become Australia’s fourth-largest mobile service provider, with just shy of a million subscribers.

Amaysim’s success saw the German quartet awarded the Pearcey Foundation’s NSW Entrepreneur Award in 2015. Named in honour of Australian computing pioneer Trevor Pearcey, the awards are presented annually to outstanding entrepreneurs in the technology and telecommunications fields.

The company’s services are offered off the back of a strong five-year renewable wholesale contract with Optus to access its fourth generation (4G) network.

Like Simyo, amaysim’s BYOD (Bring Your Own Device) model is a successful one.

SIM-only mobile plans and data packs
are sold in over 12,000 retail stores including supermarkets and convenience stores as
well as online, with a three-hour courier delivery service available to Sydney and Melbourne customers and standard delivery Australia-wide.

All subscriptions in amaysim’s suite of “one decision” unlimited plans include unlimited talk and text, and cost between $19.90 and $49.90 a month. Customers can self-optimise by upgrading or downgrading their plan online, and can cancel their subscription at any time.

Based in Sydney, amaysim has a staff of 80. Developers and customer care representatives make up the bulk of the headcount, along with a lean line-up of executive management.

“A lot of [our] employees are developers, because we’re very focused on our business platforms,” says Chief Financial Officer Leanne Wolski, who joined the company as employee number seven before the head office fit-out and final choice of business name.

“And we have our sales and marketing team, and finance and HR support. There’s not a big corporate structure, because the amaysim business model is online driven and DIY focused. We invest and leverage on the success of our technology rather than expanding physically.”

The amaysim service is for personal use so its customers are primarily Aussies of all ages and stages of life, along with a smattering of self-employed and small-business folk.

Shaking things up

Selling Aussies on an offering that was very different from those of the Telstra–Optus–Vodafone triumvirate was a challenge initially – and combatting the perception that changing service providers is a fraught and complex business remains one, according to Wolski.

“Australia was, and still is, a carrier-dominated market, and when amaysim came in the first challenge was that consumers didn’t understand our model and we needed to take time and educate them,” she says.

“When we talk about disruption, it’s about disrupting the way that we in Australia have been interacting with our carriers. We have these traditional thoughts that ‘I can’t move’ or ‘It’s too difficult to move’. It isn’t – and we’ve worked hard to show Aussies that.

“Even to this day we’re still seeing a need to teach Australian consumers that they don’t have to be locked in to capped plans or tied to the one carrier. That’s one of our biggest challenges, even though we [now] have over 900,000 customers in the amaysim group user base.”

Despite not having lock-in contracts, the customer stays with amaysim for more than two years on average – proof, says Wolski, that locking people in is unnecessary if the business offering is right.

“It comes back to customers understanding the flexibility and freedom that they have. We happily find what’s appropriate and right for our customers but if what amaysim’s offering isn’t right for the individual, they’re free to go.”

Floating the business

June 2015 saw amaysim’s five founders – along with a clutch of high-net-worth individuals who’d provided start-up capital – recoup their investment with interest, when the company floated on the Australian Stock Exchange with a capitalisation of $370 million.

Enge, Magel and Perreiter subsequently exited the business, while Hansen and O’Connell remain on the board.

The public listing was a move amaysim had been preparing for from the get-go – even before the company had opened its doors for business.

“When we raised capital the first couple of times around, we said to the shareholders that in year five there needed to be an exit strategy for them, and that’s exactly what we all worked towards,” Wolski says.

“By 2014 we were at break-even point, and that’s when we started looking at an opportunity for an exit, because we’d reached critical mass and the focus was now on scaling.

“This was always the goal – to enable the shareholders to exit, whether it was through a trade sale or sharemarket listing – so everything we did was about ensuring we were in ‘ready’ mode for that to occur smoothly when the time was right.

“From day one, although we were a private company, we operated very much like a small corporate regarding governance and responsibilities. Everything was done very professionally; our advisers said they were pleasantly surprised they didn’t have to go back and reconstruct a lot of stuff.”

After its public listing the company made its first acquisition: the $70 million takeover of Brisbane-based competitor Vaya in January
this year.

The move added around 140,000 subscribers to the amaysim customer base and provided the company with a development and customer care unit in the Philippines.

A dual branding strategy is expected to help amaysim make further inroads into the Aussie market, as its focus shifts back to organic growth.

“Vaya will enable us to compete in the $30 plan market; amaysim will continue to take on the carriers,” Wolski explains.“Vaya is very much the price fighter and amaysim the customer champion.”

The company has set its sights on country Australia, on the back of Optus’ expansion of its 4G network into more than 700 regional and holiday towns.

Investing in technology will remain a priority, given amaysim’s focus on online engagement and self-service.

“We’ve achieved an incredible amount in five short years but there’s still a lot to do to educate Aussies about our BYOD model and to help them shake the apathy associated with switching mobile service providers,” says Wolski.

“We’ll continue to do what we do well and be the customer champion, and we’ll continue to disrupt the market and give Australian consumers the choice and the freedom to choose who they want to partner with.

“And we’ll continue to give new and existing customers good products, so they don’t have to worry about switching.”

This article was first published in Business View magazine (Issue 21).

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