MVNO services

The MVNO philosophy

A MVNO (Mobile Virtual Network Operator) is a company that leases network capacity from a MNO (Mobile Network Operator) like for instance Vodafone or Telefonica to offer mobile telephony services under it’s own brand to it’s own customer base.

This concept is based on the assumption that by leasing network capacity to companies that have a strong consumer brand, or a close relation with and access to specific market segments, can leverage these assets to develop segment specific packages, and as such create new revenue streams.

Because like this, specific segments can be served much better with service packages tailored to their specific needs, this concept can lead to a substantial stimulation of mobile phone usage in these segments and as such create a win-win situation for both the MVNO and the MNO.

The MVNO status and outlook

Over the last 3 years the adoption of the MVNO model on a global scale has been massive with more then 600 MVNOs to date, spread over the US, Europe and the Far East, serving more then 65 million mobile users. Also the coming years the number of mobile users being served directly by MVNOs in Europe is expected to experience a strong growth form 13 million in 2005, to 47 million in 2009. So from this point of view the MVNO concept appears to be a success and is expected to play an ever greater role in the mobile industry.

However, when taking into consideration the very poor financial performance of most MVNOs, with a negative EBIDTA or just break-even, there is less reason for optimism.

The main MVNO failure

What went wrong is quite clear. Where the MVNOs where expected to develop segment specific packages, as such creating added value in the distribution chain, most of them couldn’t think about anything else then just reselling the basic service of the MNO for a lower price to the end-user. In some countries, like for example Denmark, this has led to such a dramatic fall in end-user prices, that it even puts at risk the high investments required for the future upgrading of the mobile networks for next generations of mobile services.

Avoiding the MVNO trap

So is there no future for new MVNOs?

Yes off course there is!

Just make sure you do it right!

So before entering into the MVNO adventure every company has to make a thorough analysis of it’s target segments and define a segment specific offer which really appeals to the specific needs of this segment and that really creates added value and a strong differentiation in the market.

The LTT Business Consulting way

To support you in this demanding and crucial task LTT Business Consulting has developed a comprehensive and structured methodology to support you in all the steps of the MVNO business planning & execution process, as shown below.

After a go-no-go decision based on the outcome of the Business plan we can also support you in managing the whole implementation process and the selection of the most suitable technology providers to get your MVNO business up and running.

Because we at LTT Business Consulting come from the Telecom world where we have worked as well in highly developed telecommunications markets in Scandinavia as in markets with very basic needs in Africa, we can help you with the development of attractive packages for segments with needs ranging form very basic to very sophisticated. Since we have also worked in other industries we are better prepared then the pure telcom consultancies to assess your MVNO opportunities taking your current core business and client base as a starting point.