In part 1 of this short 4-part Digitalk series on the next step for the MVNO business model, we noted key new drivers of change: that while many MVNOs will remain aligned with traditional MNO models, with many also being acquired by equally traditional telcos, many new ones are coming to market and many in territories which, up until now, have really not paid that much attention to the whole idea.
Omdia, for example, tells us that a) revenue growth overall is steady, but still increasing and b), as stated, new areas of the world are beginning to open their markets to new MVNO-focused entrants. This is a huge factor in the global MVNO market’s predicted rise from last year’s $85bn to an expected $117bn in just four years, with strong growth in Asia Pac predicted but also in sub-Saharan Africa, (often driven by deregulation/liberalisation).
Which is what we mean by embracing diversification. We’re not suggesting an MVNO tries to spread itself too thin or try and attack multiple customer opportunities in parallel (though, good luck if you think this would being you success.
What we mean is that MVNOs blossom when focused on specific segments to which they have particular access but that are not well supported by the MNOs. MVNOs may extend services around their core focus, e.g. add small enterprise to consumer, but it’s best to not try and get into entirely new segments: what you need to do is diversify not your core proposition—each individual MVNO needs to focus on its particular approach to succeed—but that it’s getting easier and easier to spread your attack out to whole new audiences in countries that up until now seemed impossible to access.
Look at what’s happening with the rise in eSIM, which is especially interesting to people who travel frequently and who want nice cheap ways to call and text home while away. eSim specialists are popping up all over the world: examples here include aloSIM, a free eSIM app created by AffinityClick, the Canadian software development team that also created the popular temporary phone number Hushed, and, well, aló, a separate new Madrid-based MVNO claiming to offer the first ultra-low-cost mobile rate in Spain. (We’re going to meet another MVNO with the same ‘hello’-like name in a second; maybe not too surprising as we’re in a voice-based business all about encouraging people to open conversations with one another.)
But while there will always be strong consumer interest for cost-effective and simple voice and data plans, embracing diversification in where your customers are, both B2C and B2B, is emerging as a highly viable strategy.
There’s also diversification in terms of possible MVNO market ideas; in Omdia’s analysis while, for sure, most new MVNO launches are in either telecom or the pure MVNO space, the accelerating diversification of MVNO services for specialised areas is highly evident.
In the set of MVNOs the analyst group has identified in 2023 to date, for instance, while the majority (68%) were in either telecoms or pure MVNO, we also saw propositions set up in:
- retail (8%)
- financial services (5%)
- utilities (5%)
- ‘brewing’ (presumably, for users of a brand libation) 3%
- environmental concerns (3%)
- gaming (3%)
- health (3%)
- and wearable (3%).
Is embracing diversification the new smart MVNO move?
We can see that interest in the MVNO model is now spreading out across sectors where mobile is seen as a supporting play that complements an existing business or customer service.
That also means that if your idea for a great niche MVNO service is not in traditional telco or pure MVNO, it can absolutely make sense to launch in countries that already have a strong, established MVNO market. Others have proven the attraction to MVNOs; now you can take your more specialised proposition to already fertile ground.
An example here is Indonesia’s Telekomsel, which deliberately targeted young consumers with a customised telco offering heavy on a digital-first approach to registration and onboarding (“Choose the most suitable package catering to your digital lifestyle with ease, flexibility, and without restrictions”).
And if it is a mainstream MVNO play, you have all these new countries finally opening their doors to new ideas. Africa Analysis predicts that the number of MVNO SIMs in that region could reach 10 million by 2028, but could even hit 13.5 million with the inclusion of large retail brands.
Even better, what if your idea was to support an existing non-telecom brand in a market that could deliver that boost to customer loyalty and awareness that the MVNO is so perfect for?
An example here is South Africa’s mobile banking contender Standard Bank Mobile which in June announced it was to use local supplier MTN’s network to offer a new set of data and voice packages for its users—and, to reflect its embrace of this MVNO-flavoured way of working with its customers, has now started to call itself Standard Bank Connect.
A rising MVNO tide lifts all boats…
If you are already massively connected as a brand with your users via mobile, it really isn’t that much of a shift to extend your offering to include an attractive phone service with your logo clearly slapped on it.
Take our last ‘hello’-sounding brand, ALLO Communications, which delivers Internet to residential and business customers across Nebraska, Colorado and Arizona—and which has announced plans to offer voice and data calling plans (‘Keep your phone number. Get rid of the outdated service’) as another menu option.
More and more examples are coming through of genuinely innovative new MVNO plays like ALLO. The verdict must be that this is a great area to consider moving into.
How can new MVNOs benefit from embracing diversification?
As Omdia Principal Analyst Julian Watson, who compiled the data points we are partly responding to in this series, notes, “Some interesting business and pricing models [are] emerging” in this space.
But getting your new MVNO idea off the ground—be it as a low-cost, fun alternative to the incumbents, or to help a non-telco brand better delight its customers like that South African bank, getting the tech part of your back end set up is as important as defining a compelling product for the market you want to get into.
To take just one aspect of this: how easy it is for you—or a potential bigger new owner—to connect to other critical business systems, or even new consumer products like Apple Vision Pro?
In the final two Parts of this discussion, we’ll go into the technology factors that make whatever MVNO you want to get off the ground a viable proposition.
This is Part 2 of a 4-part series. See Part 1 , and see all the many services we here at Digitalk provide for the ambitious MVNO, here.
