How MVNOs are performing in China

China MVNO subscriber base
It’s not good news for Mobile Virtual Network Operators or MVNOs in China since they face low ARPU and low income from data business.

The weak performance is despite the fact that these MVNOs in China posted 10x growth in subscriber numbers in 2015, says Strategy Analytics.

China MVNOs have 20 million subscribers. China has more than 1 billion population. Snail Mobile, d.Mobile and YuanTel account for one half of MVNO subscribers in China.

Snail Mobile focuses on mobile gaming, d.Mobile on consumer electronics retailing, and YuanTel builds enterprise services.

China’s MVNOs are playing in market niches because of 96 percent mobile subscription penetration and high wholesale data prices. China Mobile, China Unicom and China Telecom are the government owned telecoms in the country.

Since Chinese MVNO’s 20 million customers have from marginal usage profiles and low spend, the average revenue per user (ARPU) of MVNOs is 75-80 percent below that achieved by China’s three network operators. The average data usage is 85-90 percent lower in the case of MVNOs. This kind of financial condition will pose challenges for China MVNOs in the long run.

Strategy Analytics says the improving telecom regulatory climate, with new wholesale pricing requirements and full commercial MVNO licenses, will significantly boost growth opportunities in 2016.

Guang Yang, senior analyst, Wireless Operator Strategies at Strategy Analytics, noted that MVNOs have worked hard to identify profitable market segments and develop new service models.

Market leader Snail Mobile is tying its mobile service into gaming-optimized handsets, with hardware bundling niches in the wearables sector. MVNOs have also focused on enterprise applications and international roaming to carve out sustainable niches.

“With commercial MVNO licenses will be awarded this year, international companies may enter the Chinese market. The government’s policy on lower wholesale data rates will expand the business model opportunities,” said Phil Kendall, executive director, Wireless Operator Strategies.

The challenges for MVNOs are the competition from the government-owned China Mobile, China Unicom and China Telecom.

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