MVNO: cut your mobile phone bill by ditching the big networks

Mobile virtual network operators like giffgaff and Shebang buy and resell “real” networks’ services. Can you actually save money by using one, rather than a big name?

If you’re in the market for a new mobile phone contract or SIM card, you might have noticed that some of the best deals available come from 'networks' you’ve never heard of, or companies you didn't automatically associate with mobile phones.

These companies, including Shebang, giffgaff, Lycamobile, Virgin Mobile, Tesco Mobile and Asda Mobile, are what’s known as mobile virtual network operators or MVNOs.

MVNOs buy bulk network access from major networks at wholesale rates, then offer cheap services to the likes of you and me.

So are MVNOs a good way to save money?

MVNOs and networks

While you might not have heard of the MVNO itself, you’ll have heard of the network it uses. Within the UK it will be either O2, Vodafone, Three or EE.

One of the best known – and cheapest MVNOs – is giffgaff. It uses the O2 network and offers SIM-only deals as well as a selection of handsets sold separately. Calls between giffgaff users are free.

Rival Shebang uses the Three network and offers both SIM-only and pay monthly contracts. Its big selling point is that it doesn’t do credit checks, so you can get a pay monthly deal even if you have bad credit. Read Ten simple steps to improve your credit record.

TalkMobile – not to be confused with TalkTalk Mobile – is part of the Carphone Warehouse. It uses the Vodafone network and replaces Carphone Warehouse’s earlier MVNO, Fresh Mobile.

Perhaps confusingly, TalkTalk Mobile also uses Vodafone. It offers some dirt cheap deals, but only to existing TalkTalk customers with fixed line services.

If you want to buy your mobile phone contract at the same time as your food shopping, Tesco Mobile uses O2, Mobile by Sainsbury’s uses Vodafone while Asda Mobile recently ditched Vodafone for EE (formed when Orange and T-Mobile merged).

It’s worth pointing out that Mobile by Sainsbury’s is different to Phone Shop by Sainsbury’s. The former is an MVNO, while the latter is a specialist online and in-store mobile phone outlet, selling phones and accessories from a variety of networks.

This table summaries which MVNOs use which networks:

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Calling abroad

One corner of the market where MVNOs prove a winner time and time again is calling abroad. But you’ll need to pick the right MVNO.

Companies such as Lycamobile, Lebara, Now Mobile and Vectone target ethnic minorities with families and friends in their home country. They use a number of different networks to cover all the countries they route calls to.

You’ve probably seen Lycamobile advertising on the high street – it offers calls from 1p a minute from the UK to destinations such as India, China and Nigeria under the slogan “Call the world for less”.

Calls between Lycamobiles are free, while calling UK landlines costs 5p a minute and other mobile networks 10p a minute.

Rival Lebara also charges calls to certain countries, including Poland, Nigeria, China and India, at just 1p a minute.

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Can an MVNO save you money?

If you have friends and family in certain countries around the world that you call regularly then it’s a no-brainer – using Lycamobile or Lebara will save you money.

If you mostly call UK landlines and mobiles then MVNOs are always worth considering and comparing against what the networks offer. They tend to be especially cheap on SIM-only deals, so if you already have a handset you like this could be the way to go.

For example, Virgin Mobile offer unlimited minutes, texts and data for £15 a month. If you don’t need a totally unlimited plan, giffgaff offers 500 minutes, unlimited texts and 1GB of data a month for £10. TalkTalk Mobile offers the same amount of minutes, text and data for just £6 a month – but you’ll need to be a TalkTalk phone or broadband customer to be eligible.

Things to consider

Before you sign up to an MVNO, check which network it uses then check the coverage in your area. Links to the networks’ coverage maps can be found on the Ofcom website.

For a more specific check on the coverage at your home or workplace, it can be a good idea to ask friends or neighbours how they find the signal.

It’s also worth checking whether the company you choose offers 4G access – some networks only offer this faster internet service to direct customers.

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