What are the greatest opportunities for MVNOs? It’s a question we asked
leading market commentators and experts as part of our webinar “The MVNO
challenges are real, and so are the opportunities."
James Gray, MD at Graystone Strategy, known internationally for his strategic
consultancy with MVNOs welcomed to the debate:
Mike Mills, business director at high growth B2B communications
provider, Gamma
Nick Wooten, MVNO director at BT Wholesale, which underpins many of the UK’s MVNO brands
Salman Tariq, VP EMEA at BSS specialist, Optiva
James opened the conversation with pertinent market analysis highlighting how important strategy and digital tools, including operational support systems (OSS) and business support systems (BSS), will be for differentiation and customer experience.
In an industry that boasts 2,000 MVNOs worth $80B globally, it’s clear the MVNO market is here to stay. Indeed, Juniper predicts that "MVNO in a box" will triple in value to be worth £1B by the end of 2029.
Consumer represents the largest slice with plenty of innovation worldwide in SIM-only plans, eSIM, and travel SIM.
SIMO has transformed the market. In the UK, there’s general acceptance that at least 12% of consumers use a wholesale MVNO, and it’s largely been driven by SIMO. CCS Insight goes as far as to state it’s as great as 20%.
The innovation in eSIM-enabled handsets will kill off the SIM. It, therefore, presents a huge opportunity for MVNOs, giving way to both domestic offers that challenge the MNO market and opening the burgeoning and highly lucrative travel SIM market. Roaming substitution is one of the most potent growth areas. Both are made possible thanks to maturing digital technologies and flexible billing platforms.
MNO sub brands, utilities, and retail are just some of the sectors entering the market. But banking is leading the way in emerging markets, with more developed territories on the cusp of gathering pace. A good example is Capitec Bank in South Africa, which has seen 8,000 SIMs being connected every day since it launched its MVNO.
In terms of the business space, enterprise MVNOs are tapping into the underserved SME market, which is concerned with cost pressures.
IoT providers are proving an exciting area to watch, too, with connected cars, smart utilities, and smart cities all coming to the fore. It’s attracting a lot of private equity and M&A activity, and it will likely help 5G deliver on its promise.
Despite all this potential, Nick Wooten, BT, was keen to emphasize that becoming an MVNO is not easy. “While there has been an explosion in MVNOs, it’s the few that are delivering the real growth. These are the brands that have created a ‘sticky’ proposition, often leveraging an existing loyal base, as seen in retail.
“Ultimately, it shows there are no shortcuts. A website and an app won’t deliver success.”
So, what will?
Differentiating and serving customer needs is critical
The panelists emphasized the importance of addressing specific customer needs and providing value beyond simply offering a lower price.
Three areas of focus were highlighted:
Understanding your customer base:
Clearly identifying the target market and understanding their specific requirements is crucial for success. Salman Tariq, Optiva, explained that this creates new ideas, including celebrity-backed MVNOs, in certain parts of the world. “Celebrity culture is driving an interest in influencer-related MVNOs. Whereas in Africa, the underserved banking customers are gravitating to new mobile players to help them manage financial and communication needs.”
Nick was keen to point out that success will rest on the balance of high acquisition and low churn. This is an area that the most successful brands pay real attention to.
Building a strong brand and sales channel:
MVNOs must establish a recognizable brand and have a well-defined sales and marketing strategy to reach a target audience. Salman noted that differentiation is coming in new forms today, thanks to technology stack evolution. “Humane in the USA is using GenAI and AI to meet the needs of younger mobile users. In Saudi Arabia, Salam mobile has a laser focus on high ARPU users, resulting in 1m customers.”
Mike Mills, Gamma, adds that the travel sector shows real promise, “It’s underserved at the moment. However, as eSIM takes off, I expect we’ll see niche MVNO players pop up.”
Delivering excellent customer experience:
Providing a seamless and positive customer experience is essential for building loyalty and driving growth.
This was underlined by Mike who believes that business MVNO must pay closer attention to delivering an unbeatable service. “Business customers are demanding. They want more than a mobile connection for managing a disparate workforce, and they want absolute clarity on billing. We’ve had success by building unified comms offers.”
Digital transformation is driving new service offers and delivery models
Disruptive MVNOs will be the ones that take advantage of digital models.
As Mike highlighted, if you have the ability to distribute a message, then anyone with a digital footprint or capability can become an MVNO. “Take social influencers who have massive reach to massive audiences. It’s not something that would have been considered before now. But technology makes it a viable idea for an MVNO.”
Nick says that correlates with the demands of Gen Alpha, those born after 2010.
“They expect to live, communicate, and transact in an online-first world. It’s efficient, flexible, and always on. MVNOs need to pay attention to this. How can they stand up an MVNO that meets these expectations? Being able to switch out an offer online and update an app should all be top of the list in terms of capability.
Strategy should cover these components:
Digital-first customer experience:
Consumers, particularly younger generations, expect a seamless digital experience throughout their interactions with brands, from purchasing to ongoing engagement.
Salman says MVNOs need to think about channels to market and then end-to-end delivery, including the billing experience. Well-structured and integrated BSS and OSS solutions, like those offered by Optiva, are perfect for taking the strain:
“If you’re entering the market now, then being digital native from the start will be a big advantage. Digital onboarding is a must, for example. However, don’t forget the back end. If your operational models aren’t underpinned by agile OSS solutions, or your BSS isn’t set up to turn offers on and off quickly, then you can’t compete.”
“There’s also good reason why Mint mobile is so exciting – its customers are
sticky because the proposition is so strong. That’s all about driving a consistent customer experience.”
Cost efficiency and flexibility:
Digital platforms offer significant cost advantages over traditional retail models and provide greater flexibility in adapting to market changes.
Mike believes those who can drive recurring revenue and prove they can sustain it will get investment. “It’s getting harder to attract investment but if you can use technology to build a brand that’s agile, you’re in a stronger position. We see this in IoT particularly.”
Nick agrees, “MNO sub brands aren’t being launched on legacy systems for good reason. Launching tariffs would be too difficult and the proposition can’t be delivered on.”
Partnering with digital providers:
Leveraging existing digital platforms and expertise can accelerate the digital transformation journey for MVNOs.
As Nick explains, “They have the answers. They’ve done the hard work and can plug into your plans. In short, they exist to take on the high-energy, high-cost design and build.”
Mike adds that for these reasons, MVNEs are becoming an essential part of the market growth. “They have the integration capability and can help MVNOs be agile and compete. They will be pivotal to market acceleration.”
There are some pitfalls that MVNOs need to avoid
The panel put forward the common mistakes they see and how to manage them.
Nick introduced the ‘Vanity project’ trap, where little attention is paid to really understanding if the market exists in the first place. He then added that distribution is often overlooked, too.
“How will you get the product into the hands of the customer? You must build the brand and make it visible, which is expensive. Don’t underestimate the cost and effort it will take. It’s not a case of ‘build it and they will come’.”
Large enterprise MVNOs are an area of concern for Salman, “While they show interest in digital transformation, they often face challenges integrating various communication platforms and data management systems.”
“You must worry about what is under the hood. There’s now a realization that software as a service – SaaS - is vitally important in overcoming the integration challenges.”
Mike pinpointed the importance of commercial agreements and cultural fit. “Over the years, we’ve wrestled with commercial models. It’s taken time to find the best match for the MVNOs that reflect the value and the goals of the business.”
“In the same way, cultural fit is just as important. If you can’t work together, then you’re undermining your potential for a successful launch. With these two things in place, you’re in a strong position to build propositions that will work.”
And what of AI?
AI is emerging as a tool for improving customer experience, driving automation, and gaining insights from vast datasets.
Salman said it’s still early days for widespread adoption within the MVNO market, “We’ll see some first-mover propositions coming through. Expect to see more GenAI assistants, like that of Humane.”
Nick added that AI would help with complex data crunching like base management and personalization, “I think we’ll see it used in a variety of ways across the industry. But it will be MVNOs, without the technology baggage, who will find the use cases first.”
For Mike, AI has two avenues, “We’re some time away from being able to manage the sheer volume of data, location information, etc., that can be turned into something meaningful. However, we do see adoption of AI for operational tasks like meeting note taking and transcription. That will be a big part of the market.”
Concluding remarks
The MVNO landscape is dynamic and presents both significant opportunities and challenges. Success requires a clear understanding of the target market, a compelling value proposition, and a commitment to delivering a seamless digital experience at both the front and back end.
Technological advancements are and will shape the market, enabling MVNOs to operate more efficiently, innovate faster, and deliver enhanced customer experiences. New launches will use the latest in digital tools.
But there is nothing to stop those with legacy systems from doing the same. The trick will be identifying technology partners like Optiva, who can simplify the integration and offer fast and cost-efficient delivery.
This digital strategy will determine the future of the MVNO market. It will be driven by those who can effectively leverage the advancements and create differentiation in a competitive landscape.
Interested in knowing more?
Head to Optiva’s webinar pages to watch the full discussion and explore other useful content for MVNOs who need BSS/ OSS solutions. If you’re ready to get started, speak with our team, who can discuss your specific needs and the options available for your situation and strategy.
By Misann Ellmaker, VP, Marketing & Communications, Optiva