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Ad-funded virtual mobile operator Blyk is on the verge of agreeing its first partnership deal.
The deal is likely to see Orange offer subscribers aged 16-24 £15 worth of voice and SMS credit in exchange for receiving advertising from brands on their mobiles.
Blyk’s strategy has shifted this year from its direct-to-consumer virtual network model to rely entirely on partnership deals. It has emerged that in February it stopped accepting new subscribers to its network to counter falling ad revenues.
The virtual operator is understood to be keen to keep its brand name for a youth-targeted ad-funded offering following any partnership deal, but will no longer operate its own independent network.
Talks between Blyk and Orange have been going on for several months, according to sources. The two have a strong relationship as Blyk already rents its network capacity from Orange.
One option following any deal is understood to include Blyk’s nine-strong sales team merging with Orange’s sales business. A small Blyk team would remain in the UK to work on signing up further operator partnerships internationally.
A Blyk spokeswoman confirmed no new customers were being added. “We’re not seeking new subscribers at the moment and there aren’t any invite codes,” she said.
The network currently claims to have 200,000 subscribers but this has failed to attract sufficient interest from advertisers to allow it to continue expanding. The service built its subscriber base via a series of partnerships with music artists like Wiley, Lily Allen and Mike Skinner.
A partnership deal with a major operator will give the service the chance to achieve wider reach and tap into the large subscriber base.
Blyk initially announced plans to move to an operator partnership model in November as it secured a £33.7m investment package. In May new media age revealed it would ditch its virtual network model, which Blyk labelled a proof of concept, in favour of a partnership model. Blyk also shelved plans to launch a direct-to-consumer virtual network in Belgium and Holland.
The spokeswoman said talks were ongoing with a variety of partners globally. “We’re in negotiations with potential operator partners in the UK and abroad. We’re shifting the business model from a virtual network to partnerships.”
Executives across the industry said a deal between Orange and Blyk would make sense as the two already work closely together. While there’s a chance an ad-funded offering could cannibalise Orange’s core offering, any such service could also be a valuable customer acquisition tool.