Informa Telecoms and Media Strategies for Prospering in the New MVNO Hype Cycle Dario Talmesio Principal Analyst, Informa Telecoms & Media
Informa Telecoms and Media
Strategies for Prospering in the New MVNO Hype Cycle
Dario Talmesio
Principal Analyst, Informa Telecoms & Media
Informa Telecoms and Media
State of the MVNO market today and tomorrow
2
MVNO is and will remain “the
market of small and large
niches”.
But it is set to almost double in
size in the next 5 years.
Informa Telecoms and Media
Strong growth in most regions is expected
3
• Most existing MVNO markets are still growing, moderately
• New MVNO markets coming along: China, Mexico, Kenya, Colombia, Czech
Republic, Russia…and more.
Informa Telecoms and Media
History of MVNO growth and decline
4
MVNO markets have a record of hype cycles followed by disillusion, a pattern
that is set to repeat.
Historically, MVNO
markets have witnessed
two strong hype cycles:
2004-5: Europe and US
2012-2013: Globally
Informa Telecoms and Media
A market populated by many casualties
5
• Why do MVNO fail?
• Will MVNMO continue to fail?
• Is there a “perfect” MVNO model?
Informa Telecoms and Media
…many successful players
6
• 3m subscribers
• ARPU: GBP 15
• Quad-play customers: 16.2%
• 25.5 million subscribers
• ARPU: USD 19
• Churn 3.8%
Informa Telecoms and Media
..many successful players
7
• 2.8m customers
• EUR 336m Revenues
• 45% penetration of financial services
• Transfer of positive brand attribute to
mobile segment
• Long customer life cycle (low churn
rate)
• 120,000 customers
• Loyalty scheme: pints redeemable for
telecom services.
Informa Telecoms and Media
All with something in common: operating in a low-margin, fast-moving
environment
8
• MVNO margins are at best half of MNO margin levels
• No “margins” for errors
Informa Telecoms and Media
Strategies to monetize your customers better
9
• Ethnic players
• Post offices & Banks
• Fixed line, Broadband and TV operators
• Retailers
Informa Telecoms and Media
Ethnic Players
10
Airtime Transfer
Bundles International Promotions
Cross-Selling
Informa Telecoms and Media
Postal Services providers and retail banks
International Money Transfer
11
App-based
postal services
Hardware bundling
Informa Telecoms and Media
Fixed line and Media companies
Fixed-Line, Broadband, TV – Bundles
12
Single-Play 16.10%
Double-Play 18.10%
Triple-Play 65.80%
Quad-Play 16.20%
Informa Telecoms and Media
Techniques to upsell and cross-sell within MVNO segments
Monetize customer base with the right offers
The most immediate opportunity for MVNOs is to sell existing customers
telecoms, digital-entertainment and, eventually, cloud services: In-depth
customer knowledge will reveal which segments are better targets for higher-
level or different data plans, handset upgrades or, in the case of triple- and
quad-play MVNOs, which customers could be sold fixed-line or TV services in
a bundle with their mobile services.
Stimulate revenue with the right timing
Equally, MVNOs should be in a position to understand not only what
customers might need, but when they might need it. Timing is everything:
MVNOs must offer the right products at the moment the subscriber needs
them. In cases where customers might not be aware that they need a service
or add-on bundle, the MVNO should be able to entice them to try it out,
ultimately boosting ARPU.
Tackle adjacent markets
MVNOs tend to generate the vast majority – if not all – of their revenues from telephony
services, but some of the smartest MVNOs have started looking at how to generate
revenues from adjacent services, addressing much of their customers’ budgets, not just
the share that is spent on telephony. For instance, some have started selling cloud
services, travel products, insurance and other non-telecomsrelated services. Only a
deep understanding of their customers will enable MVNOs to grow into areas outside of
telephony.
Anticipate churn
In addition to protecting and stimulating revenues, MVNOs need to engage in perpetual
real-time scrutiny of each customer’s “mood,” in order to be able to anticipate and
prevent customer losses. Once customers start churning, it is often too late for the
operator to start trying to hold on to them. This is even more critical for MVNOs, given
that they operate low-margin business and on a smaller scale.
14
Informa Telecoms and Media
Conclusions
• MVNO market(s) have witnessed a steady growth in recent years
in will continue to do so in the forecast period
• MVNOs operate in low-margin environment
• Mortality rate of MVNOs is extremely high and is set to remain
high
• MVNO need to be able to cost-effectively retain their customer as
well as smoothly stimulate spending
15