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The future MVNO market

Looking at the MVNO market from a historical perspective, there is little doubt that it is cyclical and subject to constant change.

Many people believe naively that the market will remain one in which MVNOs sell their mobile services in much the same way as the classic MNO and discount MVNOs.

But in the future, we are likely to see many different types of MVNOs emerging – ones that will create a business based on, for instance, their distribution power, brand, content, technology or marketing strength.

We believe it is only the imagination and business model that limit the possibilities in the MVNO world. A company that can make a positive contribution to the mobile universe, and which possesses the right strategy and management team, has a good hope of succeeding.

The art is to set up a MVNO that develops a sensible balance between SACs and average lifetime ARPU. The time is gone when an MVNO’s value is determined by the number of customers it has. In the future, the key issue for any MVNO will be its ability to generate profit.

This ability is crucial in order to avoid ending up part of the consolidation process and, moreover, in making yourself attractive to the larger players in the market.

We have analysed most MVNO deals and found a clear correlation between a company’s market position and its price. Read more in our report, MVNO2.


MNOs’ role in the MVNO market

If you are an MNO, you have several possible entry points into the MVNO market. Strand Consult has access to the vital information that operators need: with concrete knowledge and data on numerous markets, we can offer a perspective on how these markets are likely to develop before, during and after the entrance of MVNOs. This information is indispensable for MNOs planning their own strategies.

We combine our reports with tailored strategic workshops which we use to quickly and effectively describe the scenarios that face individual operators. Strand Consult’s ability to predict the future is legendary – over the years, we’ve proven a unique ability to foresee how many individual markets will evolve.

Read more about our report MVNO2 and combine this with our tailored strategic workshop.
 


Media companies’ role in the MVNO market

A lot of media companies are contemplating moving into the MVNO market either alone or in partnership with an operator or existing MVNO. We don’t believe that this is an easy option, and suggest that media organisations consider several matters carefully before rushing headlong into this market.

We have had a great deal of experience helping media organisations develop their mobile strategies over the past 14 years. Our deep understanding of the VAS and MVNO markets has helped media organisations launch many innovative mobile strategies in recent times.

If you are a media organisation considering entering this market, there a number of things you need to think about, much of it relating to shareholder value.

Our MVNO2 LINK report details the challenges media organisations face entering the MVNO market. The report contains a number of case studies, both positive and negative. For us, it’s not about convincing media organisations to enter the mobile market. Rather, we consider what is best for shareholders in those companies in the short-term and long-term.


MVNOs’ role in a mobile market
A lot of people dream of establishing their own MVNO. It is one thing to dream, but quite another to achieve success in the mobile market. The prerequisite for establishing oneself as a BR, SP, MVNO or MVNE is a wholesale agreement with one or more MNOs. That agreement lets you use the operator’s network to serve your potential mobile customers.

 

There are 2 options in terms of what type of MVNO player to set up as:

  1. The entrepreneur, who says: “I want to establish a mobile offering with a serious and attractive partner. We have a strategy worked out, and we know which segments to target. We have a clear understanding of our role in the marketplace. We do not want to be a me-too player, but a mobile provider that differentiates itself in a number of areas. Our focus is to create a sound and healthy business.”
  2. The gold digger/fortune hunter, who says: “I want to establish a mobile offering with the sole purpose of making a fortune quickly. Can you, as an MNO, tell me what to do and how to do it as quickly, easily and cheaply as possible?”

Without naming names, we have to acknowledge that a lot of players fall into the first category; the number of businesses seeking to make a Telmore clone is very long.

Most MNOs are tired of meeting people that have no understanding of the mobile industry and who dream of establishing a successful mobile business without having done any serious preparation.

To obtain an agreement with an MNO is a long and detailed process that can easily take 3 to 6 months and involve a number of different phases. A newcomer can proceed quickly through these phases only if sufficient preparation is done before entering into dialogue with an MNO.

Experience shows that only 1 in 20 attempts to reach a wholesale agreement with an operator succeed. Furthermore, only about 10% or 20% of MNVO agreements struck end up leading to the creation of a viable mobile business.

The list of failed mobile providers is a lot longer than that of successful ones. Simply put, a wholesale agreement is not a guarantee of success, although it is a step further than many others get.

Read how you can achieve success in the MVNO market. Purchase our MVNO2 report and complement this with a tailored strategic workshop.


Terminal manufacturers’ role in the MVNO market

For many years, most terminal manufacturers have made a good living out of mobile operators’ purchases, subsidies and giveaways of their products. But in a world where MVNOs are becoming more and more influential, terminal manufacturers face a number of important strategic choices – a lot more complicated than the ones they have faced in the past.

 

New players and new business models have meant greater complexity in the marketplace and turned upside down the way that operators subsidise terminals. We are moving from a market in which operators push good offers to all clients, to one where good offers are targeted at good clients, moderate offers at mediocre ones, and bad or no offers at bad clients.

  

Making a living as terminal manufacturer in a market with many MVNOs demands a brand new approach, fresh strategy and new selling techniques – and this applies to terminal distributors as well as manufacturers.

We have highlighted the specific challenges terminal manufacturers face in our MVNO2 report. The report contains a number of case studies, both positive and negative. As we see it, it’s not simply about describing the market, but telling you how to sell terminals in the short-term and long-term.


Infrastructure manufacturers’ role in the MVNO market


Most infrastructure manufacturers dream of becoming serious players in the MVNO market, but also face a serious dilemma. On one hand, they need to look after their relationships with existing customers, which are usually MNOs. On the other hand, they believe that the fast-growing MVNO market represents too good an opportunity to pass up.

Strand Consult has spent a lot of time analysing the MVNO market from the point of view of infrastructure manufacturers, and has concluded that most lack the necessary insight to move successfully into this marketplace. As such, they risk spending valuable time and resources on an enterprise that, most likely, they will see little returns from.

We have detailed the particular challenges that infrastructure manufacturers face in our MVNO2 report. We have analysed a number of cases, both positive and negative. For us, it’s not about convincing infrastructure manufacturers to enter this market. We look at what is best for their shareholders both in the short-term and long-term.