Virgin Mobile to Take on Telcel Using Good Customer Service

Billionaire Richard Branson says Virgin Mobile Latin America Inc. can give Carlos Slim a “small run for his money” in Mexico’s wireless market.

Branson, one of the Virgin Mobile’s backers, said good customer service could persuade customers of Slim’s America Movil SAB (AMXL) to switch over, taking advantage of new laws that make it easier to change carriers without losing their numbers.

“If you can’t do that, then the big companies lock you in forever and it gives no chance for companies like us to get going,” Branson said in an interview with Bloomberg Television. “Competition is good for him,” he said of Slim, and “of great benefit to the Mexican public.”

Virgin Mobile Mexico aims to lure as many as 1 million users in its first year, Chief Executive Officer Cecilia Vega told El Economista in June. Mexico is closely held Virgin Mobile’s third market in Latin America after Chile and Colombia, where it was adding a total of more than 100,000 subscribers a month earlier this year.

America Movil, Latin America’s largest wireless operator, is selling assets in Mexico to reduce its market share in the country below 50 percent. That would help it avoid antitrust penalties for market dominance since it serves about 73 million wireless subscribers, or seven out of 10 of all mobile-phone users.

“We can give Carlos Slim a small run for his money,” Branson said, while recognizing America Movil’s size was a big challenge. “I don’t think he’s going to have too many sleepless nights.”

An America Movil press official didn’t immediately respond to requests for comment.

Slim is the second-richest man in the world, with a fortune of $77.4 billion, according to Bloomberg’s Billionaire Index. Branson’s wealth stands at $5.6 billion.

Virgin Mobile Mexico is a wireless reseller, meaning it sells minutes it buys on a wholesale basis from Telefonica SA. The company is aiming to lure Mexico’s younger customer segment with sassy marketing campaigns in which it call its customers “rock stars” and charges for airtime by the second, not the minute, so you can “dump your boyfriend for less.”

To contact the reporters on this story: Patricia Laya in Mexico City at [email protected]; Todd Baer in Mexico City at [email protected]

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