Portugal's largest pay TV provider ZON Multimedia launched a "virtual" mobile phone service with Vodafone on Monday in a move to attract more clients and boost customer loyalty.
ZON, which has over 1.5 million household clients in Portugal, started up the service with pre-paid phones for a limited number of clients, but expects to expand it to its broader client base by the end of October.
"Our ambition is not to be a Vodafone or TMN, but to increase customer fidelity," ZON manager Luis Lopes said. TMN is the mobile phone division of Portugal Telecom.
ZON will offer discounts and free calls to its clients as part of the mobile network virtual operator (MNVO) service. Half of its clients already have more than one service between pay TV, fixed-line phones and Internet, and 25 percent have three.
The MNVO deal with Vodafone is for five years. BPI bank analysts said the mobile service should beef up ZON's product line, preventing clients from leaving, and reduce the perception in the market of a need for a merger between ZON and Sonaecom, while boosting ZON's negotiating stance.
The market has long been speculating that a tie-up is in the works. Earlier this month, business newspaper Diario Economico said state-run bank Caixa Geral de Depositos, Zon's biggest stockholder, wanted it to study a merger with Sonaecom and has consulted other shareholders on the plan. Sonaecom owns Portugal's third-biggest mobile service operator Optimus.