Challenger Strategies:
Case DNA Finland Ltd.
Mathias Tallberg
Networking Laboratory, HUT
mathias.tallberg@netlab.hut.fi
15.10.2003
Content
The Market Challenger and Challenger
Strategies
The Mobile Operator Business
Case: DNA Finland Ltd.
Conclusions
Questions?
The Market Challenger and Challenger
Strategies
 The market challenger company challenge and fight other
companies for a stronger market position
 To improve its market standings, a challenger company needs a
strategy aimed at building a competitive advantage of its own
 Can rarely improve its competitive position just by trying harder
or by imitating what a leading company in the industry is doing
 If large market share companies have a significant cost
advantage, small market share companies have only two viable
options: move to increase the market share or withdraw from the
business
 Attack the market leaders strengths rather than its weaknesses
(e.g. if the market leader is not serving the market well enough)
 Indirect attack by attacking weaknesses or gaps in the market
coverage (new geographic markets or poorly served segments)
The Mobile Operator Business
 About big investments and fierce competition
 Many issues to consider (regulation, investment,
technology, marketing, disrtibution channel,
organizational, purchasing etc.)
 Most important: pricing?
 Pricing offers a rich field of opportunities, but require
deep understanding of the business as a whole
 Falling ARPU nowadays a real problem
 Traditional mobile network providers vs. mobile service
providers
CASE: DNA Finland Ltd.
 The Finnish Mobile Operator Market
 DNA Finland Ltd.
Suomen 2G
Pricing for Voice
GPRS Pricing
The Acquisition of Telia Mobile Finland
The Distribution Channel
CASE: DNA Finland Ltd.
 The Finnish Mobile Operator Market
Deregulation
At the end of 2002 there was 87 mobile
subscriptions per 100 inhabitants
TeliaSonera, Radiolinja, and Suomen 2G holds
licenses for GSM
TeliaSonera, Radiolinja, Suomen 2G, and Suomen
3G holds licenses for UMTS
Market leaders: TeliaSonera and Radiolinja
Market challengers: DNA, Saunalahti Group, Cubio
etc.
CASE: DNA Finland Ltd.
 The third largest mobile operator utilizing
GSM/GPRS
 Owned by Finnet Ltd.
 Turnover in 2002 was 111 million €
 A mobile service provider and its services work
in Suomen 2G’s GSM/GPRS network
 Subscriber base reaches over 700 000
 DNA’s services mainly targeted for corporate
customers and other innovative customers, who
are not afraid to try something new…
CASE: DNA Finland Ltd.
 DNA funtions as the mobile service operator, Suomen
2G as the mobile network operator
 DNA:
 builds the products which are visible to the end-user
 is responsible for customer service, distribution, pricing,
marketing, and billing
 develops customer relations
 etc.
 Suomen 2G:
 builds and operates a nation-wide GSM/GPRS network and
service
 is responsible for connecting traffic with other networks, roaming
agreements, and co-operation, both nationally and internationally
 mobile service provider customers: DNA, Wireless Maingate,
Fujitsu Invia, and PG Free
CASE: DNA Finland Ltd.
 Voice Pricing
DNA wants its pricing model to be as simple as
possible…
and of course competitively priced.
Operators such as Saunalahti Group and Cubio puts
pressure on lowering prices
DNA Maraton, a typical challenger pricing policy:
 Fixed monthly price for calls and SMS’s between DNA
subscribers
 DNA the first operator in the world providing such a
service
 User friendly and clear pricing
CASE: DNA Finland Ltd.
 GPRS Pricing
Based on a fixed monthly charge (DNA GPRS for
consumer customers an exception)
Differs from the pricing policies of other mobile
operators providing GPRS service in Finland
Most affordable GPRS provider in the Finnish market
Two types of GPRS service:
 DNA GPRS
 DNA WAP-GPRS
DNA offered GPRS for a 11 month trial period without
limitations to find out if there is customer demand for
such a service => there was…
Is this the best alternative?
 not fair
 congestion
CASE: DNA Finland Ltd.
 Acquisition of Telia Mobile Finland
 May 12, 2003 reached an agreement with TeliaSonera about
about the acquisition of Telia Mobile Finland’s operations
 Now over 700000 mobile subscriber customers
 The acquisition combined the resources of two challenger mobile
operators
 Over 100 employees lost their jobs
 Suomen 3G sold, Suomen 2G got the UMTS license from Telia
Mobile Finland
 The Distribution Channel
 Both traditional and totally new types of distribution channels
(e.g. Filmtown, Helios, and R-Kioski)
 Do not want to wait passively in stores, but wnats to find
distributors who customers visit anyway and on a regular basis
 The network of DNA shops: > 550 today
Conclusions
 Mobile communications is here to stay
 Decisions on strategies critical
 DNA has been able to build a strong and
wellknown brand fast
 DNA’s mobile subscriptions have reached the
planned 15%
 The year 2004 will tell if DNA will be able to
make positive cash flows as well…
Questions?