Australian MVNO Kogan Mobile claims it has been “muscled out of the mobile industry” by the country’s largest mobile operator, Telstra.

Kogan Mobile had gained a reputation for selling low cost connectivity in Australia but the wholesaler it relies on, ispONE, has been in dispute with Telstra, which operates the underlying network.

The Kogan branded MVNO is a sister company to Kogan Technologies, founded by outspoken entrepreneur Ruslan Kogan, who held the position of Australia’s richest person under 30 until his birthday last year.

Telstra took steps to terminate its contract with ispONE over allegations of unpaid bills for wholesale capacity. Although ispONE commenced proceedings against Telstra in the Federal Court, the mediation between the two firms failed to achieve a satisfactory result. The situation has been further muddied by reports that ispONE is planning to apply for insolvency imminently. Indeed, Kogan said that it understands that ispONE has appointed voluntary administrators.

“Telstra has today notified Kogan Mobile that it will be terminating the supply of 3G prepaid mobile services to its wholesale reseller ispONE within 24 hours, and has established a transition arrangement in respect of your service,” Kogan Mobile wrote in a statement on its website.

The MVNO said despite its “numerous and concerted efforts” to persuade Telstra to maintain and support Kogan Mobile’s arrangements with ispONE, Telstra has advised that it will still terminate the 3G prepaid mobile services to Kogan Mobile. This is despite another ispONE customer, Aldi Mobile, successfully negotiating a deal direct with Telstra to maintain the continuity of its service.

“As we lowered the prices for services, we were happy and so were our customers – but not everybody in the industry was pleased with what we were doing,” Kogan added in its statement.

The firm added that many companies have recently fallen out of the prepaid unlimited market.

“We’re afraid that due to certain industry dynamics, this is a sign of things to come. We’re concerned that it won’t be long before your choice as a consumer is eroded almost completely. We worry that the big telcos in Australia will continue their consolidation of power.

“Kogan Mobile has been muscled out of the mobile industry against our will by a force much bigger and much stronger.”

KoganMobile customers will be able to keep their phone number and spend their existing prepaid credit or have it refunded by Kogan.