REPORT: Disruptive mobile business models – Is TPG going to be ‘Free’?

TPG plans to disrupt the A$18bn mobile market by launching its mobile network in Sydney, Melbourne and Canberra by mid-2018 and build out its network to 80% of the population. It will deploy a small cell network across key metros, complemented by a traditional macro network.
Free Mobile (France), 2degrees (New Zealand) and FreedomPop (US/Europe) have used disruptive business models to capture share from incumbents. Free Mobile and 2degrees captured about 18% and 23% of market share respectively, and FreedomPop has added approximately 2mn subscribers since launch.
There are five key factors that drive success for a disruptive new mobile operator: 1) Aggressive pro-consumer marketing tactics, 2) Leveraging existing customer base, 3) Favourable regulatory environment, 4) Low competitive intensity and 5) Leveraging technology to create new business models and entry strategies e.g. Wifi and 5G.
With four out of five key factors going in favour of TPG, a roaming deal will also likely accelerate market share gain. However, the incumbent MNOs in the Australian mobile market are already competing on price, coverage and data, and there are many MVNOs in the low ARPU prepaid segment offering competitive pricing and data