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Amp’d fades out

It looks increasingly like US MVNO Amp’d Mobile is going to go quiet on Tuesday. The company, which filed for Chapter 11 bankruptcy protection last month, said it may be suspending operations on July 24.

It’s probably a good thing that 84 per cent of the company’s 200,000 subscribers are on post paid contracts as those prepay users with credit still on their accounts after Monday will have to file a claim with the bankruptcy solutions firm to get their money.

What’s more, customer service will not be available after July 23 but if you owe the company money, it suggests you pay up quick sharp.

Although, getting customers to pay up seems to have been the root of all problems at Amp’d. In its Chapter 11 filing, the company claimed that its rapid growth meant the back end infrastructure was unable to keep up with customer demand.

But closer inspection of Amp’d predicament paints a slightly different picture.

Customer numbers were not the problem. Amp’d, which specifically targeted the youth and young professionals markets, recorded more than 200,000 subscribers at the end of the first quarter, 84 per cent of which were on a post paid contract.

Usage wasn’t a problem either. Impressively, the company recorded ARPU (Average Revenue per User) of $100 per month, compared with the industry average of $54, while data ARPU stood at $30, compared with the industry average of $6.74. Over half of that date expenditure came from content downloads, which is again, more than double the industry average.

The problem was that Amp’d’s contract customers didn’t like paying their bills.

A court filing with the US Bankruptcy Court in Delaware has emerged, which shows that “a host of credit and collections problems” extends to around 80,000 subscribers – almost half the company’s customer base.

This could be attributed to poor credit screening but it may also be indicative of the market Amp’d is targeting and threatens to cast a shadow over the MVNO business model, many of which target younger consumers.

Although it appears that Amp’d has not found a rescuer, the company did say that it is still in discussions with several parties on the prospect of an acquisition.

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