The Future of MVNOs - Prepaid MVNO

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offering voice and basic SMS-enabled financial services for low-end and feature phones, but as smartphone prices decline, more sophisticated services will appear. The financial MVNO, however, faces the same challenges as the retailer MVNO in terms of negotiations with MNOs, given its natural focus on the mass market. In addition, operators are increasingly eager to play a role in the m-commerce and m-banking markets. The way regulation develops in this area will largely determine the development of this MVNO model. Regardless of market-structure barriers to MVNOs, given the current demographic trends, Informa believes that those MVNOs targeting the youth segment have a larger addressable market in Latin America than in Europe and North America (see fig. 7). Nonetheless, the size of the addressable market for youth MVNOs will depend on the income levels and local competitive dynamics in each country. In the case of Virgin Mobile Latin America, for example, the flexibility of pricing models will determine the real size of the youth segment addressable in countries as different as Chile and Bolivia, especially when MVNOs plan to offer unsubsidized devices. The strength of the opportunity for the youth MVNO will also vary depending on other factors, such as changing regulation. For example, with Brazil planning to cut taxes for tablets manufactured in the country, there might be an opportunity for data-focused MVNOs targeting the devices to the youth segment. Fig. 7: Global, estimates of under-15 population percentage, end-2010 Under-15 population (%) 35 30 25 20 15 10 5 0 Source: UN Caribbean Central America South America North America Eastern Europe Northern Europe Southern Europe Eastern Europe The MVNO quadrant: Global and regional case studies The viability of MVNOs depends on local market conditions – and on the will and ability of operators to reach out to niches of customers with highly relevant services. Informa presents a selection of mini case studies of international and regional companies that have succeeded with the MVNO model. The incumbent MNO Orange, France Orange, part of the France Telecom Group, supports several MVNOs in France, its home market, including: • Virgin Mobile, which recently incorporated two quad-play offerings and is regarded as one of the most thriving full MVNOs globally. Its subscriptions totaled more than 2 million at the end of 2011. • The M6 MVNO of Metropole Television, the third most-watched TV network in the country. • NRJ Mobile, a 90/10 joint venture between banking corporation Credit Mutuel-CIC and multimedia group NRJ. Like Virgin Mobile, NRJ targets the youth segment. It had 900,000 subscribers at the end of 2011. ICE, Costa Rica Before the mobile market was liberalized in late 2011, state-owned ICE launched two MVNOs to preempt moves by new competitors Claro and Movistar. ICE partners with well-established Costa Rican companies to reinforce its role and image as a key asset for the country. ICE’s network currently supports two MVNOs, both with 45,000 subscribers as of April 2011: • Fullmovil is owned by Grupo Virtualis, a consortium formed by consumer electronics, household appliance and furniture retailers Grupo Monge and Casa Blanca. • Tuyo Movil is owned by national TV station Teletica. The first MVNO to launch in Costa Rica, it has achieved positive results in both quality and customer experience. 8 © 2012 Informa UK Ltd. All rights reserved. www.informatandm.com
The challenger MNO E-Plus, Germany German operator E-Plus has been owned by Dutch telecommunications operator KPN since 2002. E-Plus’ network enables a range of affiliated MVNOs, including pan-European MVNO Simyo, which is also present in Belgium, France, the Netherlands and Spain, and supermarket retail MVNO Aldi Talk, both leading the no-frills prepaid German market. E-Plus also enables ethnic MVNO Ay Yildiz, targeted at the large Turkish expat community, as well as blau.de, MedionMobile, MyMTVMobile and Base. Its advanced and diversified MVNO strategy has been instrumental in allowing E-Plus to maintain its market share at just under 20%, making it the third-largest operator in Germany. Movistar, Mexico Telefonica in Mexico was one of the Latin American pioneers in the MVNO space, hosting one of the first regional MVNOs, by fixed-line operator Maxcom, back in 2008. In recent quarters, Telefonica has consolidated its MVNO strategy. In July 2011, Megacable launched Megacel on Movistar’s network with the plan of targeting existing fixed-line clients by offering multiple SIMs to family households at preferential rates. At the end of 2011, Movistar was announced as the MNO partner for Virgin Mobile in Mexico. As a challenger operator in a market where America Movil has a dominant presence, MVNO enablement has become an important strategic tool for Movistar in an effort to gain market share. The MVNO Poste Mobile, Italy Poste Mobile, the MVNO of national postal service Poste Italiane, is the most significant player in the Italian MVNO market, with various voice and data offers, mobile phone deals and a large distribution network. It offers a host of VAS, primarily m-banking and m-payment, such as airtime remittances, coupon click-to-buy and m-insurance. Poste Mobile recently launched the Zero Pensieri Infinito service plan, which includes unlimited voice calls and SMS messages to all national destinations plus 1GB of data for a monthly fee of €34 (US$44). Poste Mobile is also a rare example of an MVNO marketing services specifically to business customers. Hosted on the network of second-placed Vodafone, it has more than 2 million subscriptions. Uff, Colombia Uff was launched in late 2010 by TV network RCN Television, a unit of media conglomerate Ardila Lulle group. Uff has a no-frills business model based on offering cheap long-distance calls to the main countries where the Colombian diaspora lives. Hosted on Tigo’s network, Uff rapidly added 50,000 subscriptions in its first two months, reaching a total of 250,000 subscriptions by the end of 2011 and becoming the first sizable MVNO in Latin America. From launch, the MVNO has evolved its service proposition by adding two prepaid data plans and two BlackBerry plans. Through a strategic agreement with Nokia, it also offers the “Pack Listo Uff” plan, including a Nokia C3 device with unlimited data. The MVNE Teleena, Netherlands/UK Teleena is a mobile virtual network enabler (MVNE) based in the Netherlands and the UK that provides an array of services on a wholesale basis to MVNOs and corporate customers, including low-cost roaming and converged fixed/mobile applications. The company is focused on enabling MVNOs to differentiate themselves through offering VAS. Teleena owns and operates its own BSS/OSS and an all-IP mobile core network, which is connected to Vodafone’s radio access network in the Netherlands. In Europe, Teleena has a partnership with Vodafone in the UK and the Netherlands, where it hosts over a dozen MVNOs. Datora Telecom, Brazil Datora was the first telecoms company to apply for an MVNO license from telecoms regulator Anatel in Brazil. This license enabled Datora to become the first MVNO aggregator (MVNA) in the country. The company has international expertise in both connecting operators using VoIP and infrastructure management. It is currently enabling the country’s second-placed MNO, TIM Brasil, and insurance company Porto Seguro to launch the first MVNO in Brazil. Datora has also signed an agreement with Virgin Mobile to launch operations in the country. The company has a strong focus on the machine-to-machine (M2M) opportunity in Latin America. © 2012 Informa UK Ltd. All rights reserved. www.informatandm.com 9
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