- Klarna is a buy-now-pay-later company that will be adding “mobile service provider” to its list of services
- The mobile service is powered by Gigs, which has a deal with AT&T for coverage
- But don’t call Klarna an MVNO because technically, it’s not
Klarna, the Swedish buy-now-pay-later (BNPL) firm that offers an alternative to credit cards, is entering the mobile market thanks to a deal with Gigs.
And while it looks like an MVNO and acts like an MVNO, Klarna is not an MVNO – technically speaking. That’s because Gigs is not a mobile virtual network enabler (MVNE), much as we’d like to call it that.
Let’s back up. For the uninitiated, MVNE is an industry term that refers to a company that provides the infrastructure and support services for whoever wants to launch an MVNO. By definition, an MVNO in the U.S. uses the network of a facilities-based carrier, like AT&T, T-Mobile or Verizon. Think Trump Mobile or SmartLess Mobile.
There’s something else called a mobile virtual network aggregator (MVNA), which closely resembles an MVNE, but the difference is an MVNA buys wholesale mobile and data services from mobile network operators and sells them to MVNOs. MVNEs provide things like billing and CRM, SIM provisioning and regulatory compliance.
Gigs is doing all of these – MVNO, MVNE and MVNA – rolled into one, and a little bit more, according to co-founder and CEO Hermann Frank.
“We have massive commitments and deals with carriers, but our customers don't,” Frank told Fierce. “We call it an operating system because it truly is the operating system that you need to run a mobile service end to end.”
Gigs’ sole carrier partner in the U.S. is AT&T and it doesn’t plan to add another, according to Frank. In the U.K., it’s working with Vodafone. Its carrier partner in Germany hasn’t yet been announced.
Gigs: One-stop shop
Usually, if a company wants to launch an MVNO type of service, it will use multiple players in the ecosystem to make it happen. But Gigs’ “all-in-one-software-stack” removes that complexity, making it less expensive to run a mobile service.
Similar to how Uber ditched “taxi” from its name and the regulations that go with being a taxi service, customers who use Gigs to offer an MVNO-like service leave the regulatory responsibilities to Gigs.
That’s in part how Klarna can offer unlimited 5G data, talk and text plans for $40/month. Since it’s already a digital bank and payments provider, it’s got the payments side of the business covered. Klarna counts more than 25 million consumers as active U.S. users.
As for what devices it will use, Klarna finances phones as part of its core business, but it didn’t identify a device specifically for bundling with this phone plan. Of course, users will need a phone compatible with AT&T’s network.
“At the end of the day, it's about giving consumers the best phone plan that they could possibly have today at a fair price point, because we eliminate a lot of the customer acquisition overhead that typically went to third parties that have nothing to do with the service,” Frank said.
Klarna’s plan is to roll out its mobile service first in the U.S. in the coming months to customers who signed up on a waitlist, with the U.K., Germany and more regions to follow.
Gigs commits to telecom
Gigs was founded by Frank and Dennis Bauer in 2020 and five years in, it’s doing quite well for itself. The company has raised about $95 million to date, including $73 million in a Series B round last year that was led by Ribbit Capital and included existing investors from Google’s Gradient, YC and Speedinvest. It’s also wooed talent from the likes of Stripe, Nubank and Revolut, to name a few.
Frank declined to say how many customers Gigs has, other than to say it’s a “quite substantial” number. Its contract volumes are high because it can quickly scale using the operating system model that it developed.
So far, Gigs is in no hurry to expand to industries outside telecom. “We’re very much in love with telecom,” Frank said. “We think there's a lot of big problems to solve for here, and I think we're barely scratching the surface on what's possible and how we can help the market kind of reinvent itself and visualize itself.”