XOX Com Sdn Bhd, the first mobile virtual network operator (MVNO) that won its own 010 prefix recently, plans to launch its mobile phone services by year-end.

An MVNO is a firm that provides mobile phone services without having its own infrastructure like base station towers and transmitters.

It rides on existing mobile operators' infrastructure. However, it supplies its own Subscriber Identity Module (SIM) cards and handles its own billing.

XOX's strategy is to target the young Chinese market, aiming to sign 500,000 subscribers of those aged between 13 and 35 in three years.

"We believe the easiest way for MVNO to be successful is to go niche, there's still a lot of untapped potentials," XOX managing director and chief executive officer Ng Kok Heng told Business Times in an interview recently.

Although it does not need to build its own transmission towers, an MVNO still needs to invest in systems that take care of billings, customer care and voice mail.

"We will be investing RM30 million over the next three years, mainly on equipment. We have already raised the money, via a mixture of internally-generated funds and borrowings," said Ng.

He believes the company can break even on its investments in three years. The key is to keep expenses low. XOX will outsource several components of its business to reduce costs.

XOX will compete with seven other companies namely Maxis, Celcom, DiGi, U Mobile, Merchantrade, REDtone and Tune Talk in a market where more than 85 per cent of the population own a mobile phone. While some may feel the local mobile market is too crowded, Ng believes otherwise.

"I don't think it is too crowded. For a developed market like Malaysia, we should be close to 120 per cent mobile penetration rate. So, there's still plenty of room at 85 per cent penetration rate," Ng explained.

As a new kid on the block, the company knew it needed a unique brand to make it easy for consumers to relate to its products and services.

"We needed a name that is 'quite in trend' for our target market. XOX is pronounced as 'shuo', which means 'communicating', or 'speak', in Mandarin - an essential element in the mobile operating business. Besides, XOX also means 'hugs and kisses' in text messages," Ng explained.

Ng also revealed that XOX will offer customers better value, competitive rates and it will help drive customers' data usage.