MVNO strategies to gain in Indian telecom market

Mobile users
Developed telecom markets globally have used MVNO model to expand the markets, provide better services to the consumers and achieved better mobile penetration and reach.

This is primarily due to the facts that the spectrum available with existing operators is on an average is 50 MHz. There are different service / business operational models including reseller MVNO, service operator MVNO and full MVNO.

Global MVNO markets

In 2015, the world’s MNOs hosted 992 MVNOs and 260 MNO sub-brands. This represents a total of more than 1,250 mobile service providers worldwide hosted by MNOs, in addition to their own core brands.

MVNOs remain most prevalent in mature markets where penetration (based on connections) has surpassed one hundred percent. Europe is home to two thirds of domestic MVNOs (585), followed by Asia Pacific (129) and Northern America (107).

MVNO Categories

Discount: An MVNO whose main proposition is low-cost services

Telecom: An MVNO which forms part of a range of telecom services such as fixed-line phone and broadband internet

Media/Entertainment: An MVNO associated with the media or entertainment industries

Migrant: An MVNO whose primary offering focuses on international voice services

Retail: An MVNO associated with the consumer retail industry

Business: An MVNO whose primary offering targets business customers

Roaming: An MVNO whose offering is typically targeted at international travellers through roaming agreements with MNOs across multiple markets

M2M: An MVNO that supports (embedded) cellular machine-to-machine services

MVNO forecast In India

# don’t expect more than handful of Indian companies going in for MVNO

# Few overseas companies my enter Indian MVNO market

# BSNL, MTNL will allow MVNOs to operate

# Reliance Communications and Idea Cellular may try in certain circles

Success factors

Exploit brand awareness

There are good telecom brands with great market penetration and brand recalls. Such brands with deep pockets can exploit their brand image to target specific segments like ethnic groups. Brand positioning and value proposition helps is creating their own niche markets.

Strong relations with MNOs

Since MVNOs are completely dependent on the MNO, they must forge a win-win relationship by having flexible contractual obligations based on forecast of data and voice business. MVNOs must not hit the target market which is seriously on MNOs radar. Going hand in hand with MNO will help MVNOs in getting good commercials and better assistance from the MNOs.

Great Marketing Works

Your brand is already deeply imbibed in customers minds but while selling or offering services you must deploy great marketing works where you must be able to generate enthusiasm ,interest and able to differentiate offerings vis a vis the MNOs. So market segmentation is a must, be very specific and cater to the specific needs without encroaching upon MNOs prime markets.

Focus on Sales and Customer Experience

Sales and customer care / support will play the critical role as a company trying to break into a market where MNOs have operated and controlled is not going to be an easy task. From acquisition to retention it’s going to be an uphill task. POS should be multi-channel and ease of customer enrolments should be of prime focus. Customer experience should be excellent.

Tight Operational Costs

Operational costs must be kept in tight from day one factoring present and future market and compliance risks. Get the right MNO with billing and administration. Airtime cost and customer acquisition cost will be the key factor in controlling operational costs as they may contribute up to 70-80 percent of the total costs.

Indian Past MVNO stories

UK-based Virgin Mobile, a popular MVNO, tied up with Tata Teleservices and tried to sell voice and internet services, closed India operations in 2011.

Tata Teleservices has another tie up with Future Group – Talk24Mobile (GSM). It is a royalty program for Future’s retail customers. It’s still active.

Aircel has made similar type of agreement in 2012 with Blyk Mobile, a MVNO in UK. Simpossible was another such service over Aircel, promised to offer some free voice, text and data to its customers. None of them really could really pickup and work well and were closed.

Vodafone NetCruise, powered by MTS EVDO, is the only MVNO initiative that is limited to data services. According to the website, Vodafone Mobile branded services are being offered by MTS through a brand franchise with Mobile Commerce Solutions (MCSL). MCSL will provide MTS with designing, marketing and servicing of Vodafone Mobile products being powered by MTS. This had to be terminated as MTS lost most of the licenses in 2G scam case in 2012.

Matrix Cellular India, though not related to MVNO, rented out bulk SIM cards from Airtel, Idea and Vodafone and billed clients for the voice services. In 2013, the Department of Telecommunications (DoT) sent notices and cancelled all the agreements with Matrix Cellular.

The DoT’s monitoring cell in July 2007 found that 10,145 bulk post paid connections were working in name of Matrix cellular Services.During course of the investigation, DoT found that of the 10,145 bulk connections only 836 mobile numbers were reported by Matrix to it. No information about the rest 9,309 mobile connections was provided.

Global MVNO outlook

MVNOs are expected to grow faster than mobile network operators (MNO) — driven by developing countries as the European and North American MVNO markets are reaching a plateau. New services such as mobile money and M2M will help driving this growth, but the most important factor is the changing regulatory environment supporting MVNOs.

The global MVNO Market is expected to reach $73.20 billion by 2020, according to a new study by Grand View Research. Increasing global mobile subscribers and demand for data services is expected to favor market growth over the next six years. MVNOs provide differentiated services to customers by targeting niche market segments such as retail, business, roaming, etc. This helps to avoid direct competition with MNOs and also generates additional revenues for both MVNO and MNO.

The voice services market is expected to be stagnant, whereas data and value added services are expected to generate revenue for the mobile market over the forecast period. MVNOs play an important role to address this segment; they buy minutes in bulk from the MNOs and sell them to their customers at discounted price. Technology advancements such as LTE and 4G infrastructure are expected to provide new avenues to the Indian MVNO market. However, lack in expertise may restrict market growth over the next six years.

By Basant Tomar