Lycamobile

Lyca Mobile is a British mobile virtual network operator (MVNO) operating in 23 countries. The chairman is Subaskaran Allirajah and the CEO is Richard Schafer. The company sells international pay-as-you-go SIMs. As an MVNO, Lyca Mobile leases radio frequencies from mobile phone network operators and forms partnerships with the operators in each country it serves. Lyca Mobile has also developed distinct business structures such as MVNA aggregator arrangements in various countries.

Background
The Lyca Mobile brand was launched in 2006, with the first trading using the brand taking place in 2006. By 2016, the company had more than 15million customers.

In 2016, nearly twenty Lyca Mobile employees were arrested in France, with about half of them charged with money laundering. As of 2020, Lyca Mobile is involved in three major tax disputes with HM Revenue and Customs in the UK. The previous CEO, Chris Tooley, was given a suspended prison sentence in 2023 for his involvement in an "elaborate money laundering system" in France.

Structure
Lyca Mobile has local national private companies branded under licence as Lyca Mobile and operating exclusively in the particular country as either a MVNO provider or as the principal wholesaler of Lyca Mobile-branded products.

Lycatel, also a part of Lyca Group, targets customers within expatriate and ethnic markets that want to make international calls.

Operations
The company operates in 23 countries. Lycamobile offered services in Hong Kong from April 2015, but its services were suspended from 6 April 2018.

Ratings and reviews
In the United States, the Better Business Bureau stated in July 2015 that due to Lycamobile's failure to respond to 28 of 47 complaints, Lycamobile's rating with the BBB is an F (on a scale of A+ to F).

Other Lyca telecommunications businesses
While Lycamobile represents the core business of Lyca, namely the offering of a MVNO telecommunications services, Lyca has other telecommunication services provided to consumers:

GT Mobile
GT Mobile (also known as "Gnanam Telecom") is a MNVO sub-brand of Lycamobile that operates in Denmark, Germany, The Netherlands, Sweden, Australia, Spain, Italy, France, Belgium and Switzerland (the United Kingdom arm has been merged in Lycamobile). The brand, like its parent, is aimed at those who wish to make national and international phone calls on a pay-as-you-go basis. The GT Mobile brand offers alternative pricing structures and packages focusing more on national bundles from the Lycamobile brand.

Lycatel calling cards
Lycatel is focused on the sale of calling cards to wholesalers to then sell on to the public. Lycatel offers online sales of calling cards and direct customer sales through the Lycateleshop.The Lycatel brand is not itself used as a calling card brand name, but acts as a parent brand name used on various branded calling cards. The most popular brands of Lycatel calling cards include Africa Tel, Cobra, Eurocity, One+One, Spicy Tel, Supertel, Unitel, Viper and World Call. Each calling card brand features different calling rates to different destinations with some being more suited to single use (known in the calling card industry as 'throw-away cards'). Others are more suited to occasional use but will feature a higher standard rate for each call placed. Whilst there is a fair level of confusion between pricing, Lycatel's underlying charges are significantly less than connecting international calls in a conventional sense.

The Lycatel (or as previously used "Lyca Tel") brand has been in existence since 2001 although its early ownership and operational structure were significantly distinct in the early 2000s from the present day. The present-day Lycatel brand owners and licensees form a larger organisation although the operational focus of Lycatel remains the sale of a variety of differently branded calling cards to wholesalers. Wholesalers in turn sell onto retailers who then sell primarily to expatriate customers who want to make low-cost international calls.

Lycatel primarily operates via its own national reselling companies or through its service providers in Australia, Austria, Belgium, Canada, Denmark, France, India (an outsourcing operation), Ireland, Italy, Netherlands, Norway, Portugal, Romania, Spain, Sweden, Switzerland, United Kingdom, United States and Tunisia.

Lycatel currently holds a wider country-by-country spread than the Lycamobile operations, although Lycamobile has begun operations in countries where Lycatel does not currently have a presence, such as Poland. Although the calling card market is generally considered to be in decline with the arrival of mobile telephony, Lycatel as a whole remains a dominant and significant competitor in the calling card market in Europe.

Lycatalk
The Lycatalk brand is also part of the Lyca family of brands and operates in the same jurisdictions as the calling card brands with the exception of Portugal. Lycatalk has less prominence than the Lycatel and Lycamobile brands but has a simply structured product with no set up fees or other maintenance charges. Lycatalk tariff rates are more settled and rarely vary wildly, unlike more aggressively price structured products such as calling cards.

Lycachat
Lycachat is a voice over IP (voIP) offering available to consumers. Lycachat benefits from the Lycamobile infrastructure and should be able to provide connection to traditional telephone networks at virtually no cost to the consumer.

Other businesses
Aside from telecommunications, there are a variety of Lyca-branded business ventures. Services range from financial products and insurance services, as well as ventures into logistics and even an airline business Lyca Airways, based in West Africa. Ventures of note include the following:

Lycamoney
Lycamoney is a pre-paid debit card offering, enabling mainly new migrants to European countries to have access to payment schemes such as MasterCard.

Lyca Radio
Launched in 2013, Lyca Radio was born after the acquisition by Lyca of radio frequencies previously operated by Sunrise Radio. Lyca offers two stations, Lyca Radio and Lyca Gold. Both stations have retained the previous format of Sunrise Radio, targeting South Asian communities. This is also in part because of regulatory requirements imposed by Ofcom.

DilSe radio (now Lyca Gold) took over the 1035 AM radio band used by Sunrise's Kismat Radio. Programming includes Bollywood music, and special programming for ramadan.

On 19 May 2023 Lyca Radio was found to be in breach of Ofcom regulations as it failed to deliver local news. According to Lyca, this was due to the departure of its local news journalist and that it had been "very hard to fill the role."

Lyca Productions
Lyca Productions is an India-based film production venture. Lyca produced India's most expensive film, 2.0, at a budget of US$75 million; it was scheduled for release on 29 November 2018.

Whilst filming Indian 2, three people died and ten were injured when a crane collapsed during filming. The crane operator, Rajan, fled the scene immediately after the accident.

LycaFly
LycaFly is the travel arm of the Lyca business, and specialises in offering cheap flights and holidays to predominantly Asian destinations such as India and Sri Lanka as well Nigeria. LycaFly was launched in 2007 as part of an acquisition of an existing travel agency business. The UK LycaFly business, U Can Fly Limited, is owned by Pettigo Comércio Internacional, Limitada, a Portuguese holding company located in Madeira, Portugal. Pettigo Comércio Internacional, Limitada also owns the LycaFly brand name. At present LycaFly operates only in the UK.

Lycaremit
Lycaremit, launched in 2015 by the Lycagroup which acts as a money transfer service which allows users to send money abroad.

LycaTV
Lyca TV is an online over-the-top (OTT) ethnic entertainment provider, currently available in 20 countries and in 09 languages. The service, launched in 2015, is mainly targeted at major expat communities spread across the world.

Lycalotto
Lycalotto, launched in March 2017, is a lottery syndicate platform available in the UK and Ireland. Lycalotto offers access to lottery draws from around the world, including those not normally accessible in the region such as the US Powerball.

EAP
In 2019, One of Sri Lanka largest entertainment company EAP Broadcasting Company parent company EAP Holdings was acquired for $72 million by Lyca Group.

Tax evasion and money laundering (France)
After a lengthy expose by Buzzfeed in 2015, the French authorities began an investigation into the group which led to 19 arrests in June 2016. The police stated that "The charges relate to money laundering of at least €17m and VAT fraud of several million euros". In addition to the arrests, the police also seized €1m in raids on Lycamobile's Paris headquarters and a series of residential and business addresses across the city.

The French court ruling was released on 26 October 2023, stating that the company had "knowingly participated in an elaborate money laundering system". The "opaque" system involved the use of shell companies and was also used by businesses who needed cash to illegally pay employees.

In addition to the three-year suspended prison sentence given to Chris Tooley, the head of the French business, Alain Jochimek received a three-year sentence. Lyca was also fined €10m. Lycamobile appealed the decision, stating that "The money laundering accusations concern the activities of two salespeople who were fired upon discovery of this parallel activity".

Tax evasion (Norway)
In January 2023 Okokrim, the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime, sentenced two people to over two years in prison for complicity in a "particularly advanced and reprehensible" tax evasion scheme in connection with the sale of calling cards for Lycatel and Lycamobile in Norway in the period 2010–2016.

According to the statement released by Okokrim, the convicts established a system in their work for Lycamobile, where they arranged for retailers of calling cards to be able to buy these from Lycatel and Lycamobile in cash, without being invoiced. The invoices were instead issued to a network of shell companies. In this way, they contributed to the fact that the dealers failed to disclose commission income of a total of NOK 57.3 million to the tax authorities.

Lycamobile settled the claim for NOK 3.5 million, stating that the company did not have the necessary controls in place to prevent the activities committed by the convicts.

Money laundering (India)
In May 2023, the Lyca Productions offices were raided by the Indian Enforcement Directorate. The raid resulted in the discovery of "incriminating" evidence reflecting loans and investments made without any due diligence or rationale into the Kallal Group by Pettigo Commercio Internacional LDA, a Portuguese subsidiary of Lycamobile. The investigation is ongoing but the Enforcement Directorate provisionally attached Rs70 Crore, with the total proceeds from crime estimated at Rs300 Crore.

German insolvency
In February 2021 Lycamobile Germany, operating on the Vodafone Network, was found to have not paid over €70m in sales taxes by the Federal Finance Court in Germany. This came after a lengthy investigation and despite an external audit in 2016 stating that they had indeed not paid taxes that were due. Lycamobile unsuccessfully argued that by the use of a sister company in Ireland which provided services for commission, they were able to legally avoid paying the tax.

Shortly after this ruling, in May 2021, Lycamobile Germany was renamed Amalasandan Dienstleistungen GmbH and soon afterward filed for insolvency, leaving very little for the authorities to recover. According to the insolvency practitioner, Jan Roth, the company didn’t have a business address, the only employee was the then Group CEO, Chris Tooley, and he was unable to obtain any corporate documents.

Despite the insolvency, Lycamobile continued to operate uninterrupted as it had moved the assets from the insolvent company into Lycamobile Europe Limited, a company registered in the United Kingdom.

Political links (UK)
Lycamobile donated over £2m to the Conservative Party between 2011 and 2016, with Subaskaran enjoying a close relationship with both David Cameron and Boris Johnson.

Regulatory failures
In addition to its tax affairs and money laundering investigations, Lycamobile has been the subject of multiple regulatory actions. These primarily relate to failures to collect, verify, or provide customer identity information to the regulatory authorities. This behaviour is widespread across the group with regulators taking similar action against the group in Australia, Belgium, Germany, Norway and Spain. These regulatory actions have resulted in significant financial penalties.

Corporate structure concerns
The corporate structure of the group came under scrutiny in April 2017 when KPMG resigned as auditors for Lycamobile UK Limited, stating that they had difficulties in obtaining sufficient audit evidence at this company and for related audits of its related UK companies as a result of the governance structure and oversight of the companies' system of internal control over financial reporting.

The 2021 audited report published on the Companies House website states that the company is in dispute with HM Revenue and Customs, in relation to treatment of VAT on certain classes of transactions. A provision has been recorded of £105.5m to reflect the Company's current best estimate of the potential exposure as at 31 December 2021, including penalties and interest. The auditor, PKF Littlejohn LLP, qualifies their audit opinion by stating that they have been unable to obtain sufficient audit evidence over the recoverability of a balance of £168,839,000 due from related parties (entities under common control) and balance of £18,083,000 due from directors and parties associated with directors, which is included in debtors on the statement of financial position as at 31 December 2021.

Whilst the Group CEO is listed as Richard Schafer, the most recent annual report published by Companies House for the year ended 31 December 2021 for Lycamobile UK Limited states that "The majority of the cash flows associated with investing and financing activities are ultimately either discretionary and/or with related parties under the control of Mr A Subaskaran". Mr Subaskaran is reflected as the only person with significant control over Lycamobile UK Limited as well as WWW Holding Company, the holding company of Lycatel Services which "provides administrative support services to its related parties within the United Kingdom, Europe, Australia, USA and Canada. The Company also carries out its airtime trading activities primarily within the United Kingdom, providing low-cost international calls which are marketed to residents originally from other countries through national advertising campaigns".

Subsequent to the release of the 2022 Lycamobile UK accounts, several articles were written about the company. Lyca responded to the article written by ISP Review stating ''“Lyca has a number of successful private businesses and entities under common control, but it is not a ‘group’. There is no obligation to produce consolidated group accounts, nor to have these audited. As a result, no single auditor has a remit to audit or review related party transactions, which is noted by the auditor of Lycamobile UK as a reason for the disclaimer in the audit report.”'' This appears to go against what Lyca has stated in their 2022 Director's report which states on page 8 "Lycamobile UK Limited and its related parties (Lycamobile Group) operates in the same premises in London Headquarters and share office space spaces for its centralised employees".

Related Party Loans
Across two UK entities, Lycamobile UK Limited and Thames Quay Properties Holdings Limited, Mr Allirajah and his wife have taken a total of £45.240m and £24m respectively in loans issued at below market rates. In addition to these loans, three senior employees have also received zero interest loans from WWW Holding Company Limited. A S Premananthan (Deputy Chairman) has received £3.329m, M A Malique received £3.329m and C Tooley (former CEO) received £3.329m. These amounts are as reflected in the audited accounts for the 2020 financial year. As of 4 June 2024, no further accounts have been filed.

Thames Quay Properties Holdings, a subsidiary of the Lyca Group, filed their 2022 accounts in March 2024. Despite making a loss of approximately £30 million, the company saw fit to offer a zero interest, unsecured loan of £16 million to Prema Subaskaran, the wife of Subaskaran Allirajah. Mr Allirajah is also one of the directors of the company. According to the filed accounts, the continuity of Thames Quay is dependent on loans from WWW Holding Company Limited, another related entity with the same Directors. In the Thames Quay filing disclosures, the Directors state that the Directors of WWW Holding Company (same people) are willing to continue to provide this support to Thames Quay and that they won't call in loans such as the one given to Mrs Subaskaran.

The auditors issued a qualified opinion on the audit stating that there was "material uncertainty relating to going concern". The auditor also states that it was not possible for "management" to provide them with evidence to support the net wealth of a related party associated with one of the directors and as a result, were unable to obtain sufficient audit evidence with respect of the recoverability of the £16 million loan to Mrs Subaskaran as well as an amount of £5.9 million for S455 tax that will be due when the amount due from related parties is repaid in full.

Lycamobile UK Limited, another UK subsidiary also reflects loans to the Chairman and his wife totalling £45 million and £8.325 million respectively. Whilst the interest rate is not disclosed on these loans, the document states that they were offered at a rate "less than market value". The Director's report again states that the loans will not be called in despite the fact that this could significantly reduce operational cash headroom. As a result of these loans, the company's lack of liquidity and the lack of sufficient appropriate audit evidence provided to the auditors, PKF Littlejohn LLP, expressed a disclaimer of opinion on the audited accounts. A disclaimer of opinion is only given in instances where:

In addition to the loans given to key members of the group, the group also appears to be issuing loans to employees. Lycamobile UK Limited and Lycatel Distribution UK Limited and Lycatel Services Limited accounts reflect staff loans or receivables of approximately £1m and slightly over £2m in Lycatel Services Limited's 2022 audited accounts which are stated as due after more than one year.
 * A lack of independence, or material conflict(s) of interest, exist between the auditor and the auditee (SAS No. 26)
 * There are significant scope limitations, whether intentional or not, which hinder the auditor's work in obtaining evidence and performing procedures (SAS No. 58);
 * There is a substantial doubt about the auditee's ability to continue as a going concern or, in other words, continue operating (SAS No. 59)
 * There are significant uncertainties within the auditee (SAS No. 79)

The auditors of Lycatel Services Limited, PKF Littlejohn, provided a qualified opinion on the accounts and state that they were unable to obtain sufficient audit evidence relating to the recoverability of the employee loan receivables as it was not possible for management to provide them with sufficient evidence to support the net wealth of the employees to whom the company had advanced loans with an outstanding amount of £2,037,761. Curiously and perhaps related to the concern PKF holds in relation to loans advanced by Lycatel Services, the loans issued by Lycatel Distribution UK also have a provision of approximately 91% of the value of the loan implying it doesn't expect these loans to be paid in full. The Lycatel Distribution UK Limited accounts were audited by Focus Somar Audit and Tax Accountants Limited who gave the accounts an unqualified opinion despite significant doubts about the companies ability to continue as a going concern.

Company culture and employee disputes
Lyca has faced multiple allegations regarding its behavior towards employees and the following court documents are publicly available:

Dismissal for gross misconduct without proper investigation.

Dismissal connected to raising health and safety obligations during COVID lockdown in the UK.

Dismissal for gross misconduct which gives rise to the issue of shadow directorship and control of the Lyca Group by Subaskaran Allirajah.

Other controversies
On 5 May 2016, Lycamobile Ireland Limited was found guilty of the offence of failing to comply with a request for information made by the Commission for Communications Regulation ComReg using its statutory information gathering powers. The company was found guilty in the Dublin District Court and fined €3000 and ordered to pay a contribution towards ComReg's costs.

The information requested was in connection with ComReg's ongoing review of the wholesale local access (‘WLA’) and wholesale central access (‘WCA’) markets which facilitate the provision of wholesale and retail fixed telephony, broadband and other services.

T-Mobile in the United Kingdom charged its customers exclusive of their minutes allowance for calls to United Kingdom Lycamobile/GT Mobile numbers, despite Lycamobile UK being headquartered in London, and using United Kingdom "07"-prefixed numbers issued by Ofcom, in the UK. By contrast, Lycamobile UK did not treat calls to UK T-Mobile customers any differently and calls were charged just as any "07" UK mobile telephone numbers.

Lycamobile has not paid any corporation tax for several years in the United Kingdom though the company put aside £9.5 million to cover "a potential liability of unpaid taxes" including "interest and penalties" in its 2015 accounts. Lycamobile's 2015 accounts were filed seven months late, appearing after Companies House threatened to strike Lycamobile off; such an action would have prevented the company from conducting business in the UK. Lycamobile had previously been threatened with being struck off in 2012; its accounts were filed two years late that year. Some suggest it is because Lycamobile is a significant donor to the British Conservative Party, having donated £1.3 million since 2011, including £500,000 in 2015. They also donated use of a call centre to Boris Johnson during his 2012 London mayoral election campaign.

As of February 2023, Lycamobile's auditors state they have been "unable to obtain sufficient appropriate audit evidence" regarding loans of £18 million, and there is a further £169 million of complex debt within related companies. Lycamobile faces a £100 million demand over alleged VAT irregularities.

Data Leak
On 30 September 2023, Lyca mobile suffered a global service disruption in most countries, except the US and Ukraine. The disruption was later identified as a cyber attack. On 6 October, the company released a statement to inform customers about the attack, and the data leak as the result of the attack. Included in this leak were copies of passports, identity cards and documents serving as proof of address.