Lyca ditches UK under guise of strategic growth

Well, just about. The firm, which specialises in mobile virtual network operations, said it will retain a small team of people in London, but made it clear that anything that can be done from outside of the UK will be.

There's no indication that the company is closing its UK MVNO Lyca Mobile, which piggybacks on EE's network. In fact, Lyca said it will continue to seek out growth for its MVNO operations in general.

This is about moving the group away from its UK base, which is not altogether surprising, given its recent run-ins with HMRC. The UK tax authority won a VAT case against Lyca last summer and later issued a winding-up petition against the company – the first stage in a compulsory liquidation process – although, as City AM explained at the time, this seems to have been an error; Lyca Mobile insisted it had already paid the sums sought under the order. Meanwhile, the company has also been censured for VAT fraud in France.

Whatever the truth of its various tax and other accounting issues, the company's finances are clearly not in great shape and it's only a matter of weeks since it warned that 90% of its UK staff could be about to lose their jobs. The Guardian reported that Lyca was planning to shed 300 or more jobs, leaving a staff of just 48. That tallies with the information in the restructuring announcement, although Lyca Group did not give specifics.

Far from it. Instead, it chose to focus on growth opportunities elsewhere in its operating footprint. Specifically, it pointed to the development of its mobile network operator business, indicating that it will seek out opportunities in Africa, building on its one existing MNO business in Uganda. There are also similar MNO opportunities "elsewhere," Lyca said, as well as alluding to other plans to which we might be privy in the near future.

"The company plans to announce expansion to new countries as soon as Q1 2025, including the launch of new digital brands in Spain and the USA," Lyca Group said.

It's unclear at this stage what that might entail.

There's already a Lyca MVNO in the US, running on T-Mobile's network, and in Spain, although the latter is no longer part of Lyca Group. MasMovil, now MasOrange, inked a €372 million deal for Lycamobile España in 2020, at a time when it was bulking up by buying smaller brands.

Market consolidation may mean that Lyca Group has now spotted a worthwhile route back into Spain, or it could be that its plans for a new digital brand mean something else entirely. We will have to wait for a formal announcement on that score.

For now, Lyca Group is focused on putting a positive spin on its UK downsizing, which comes "in response to intensifying competition and rising costs across the telecom sector," it said.

As well as enhancing the group's digital capabilities and streamlining its operations, the move will "achieve substantial cost savings, which will be reinvested in market expansion and customer-focused initiatives," Lyca said.

When you cut to the core of it, it doesn't look much like a strategic decision to focus on the African network operator market at all. This is a cost-saving exercise at a time when the telco's financial dealings in the UK have come under close scrutiny and have been found wanting.