What is a Mobile Virtual Network Operator (MVNO)?

An MVNO is a business model that emerges when the traditional mobile value chain is ruptured. Therefore new players can participate in the mobile value chain and extract value leveraging valuable assets.

Both Mobile Network Operators (MNOs) and Mobile Virtual Network Operators (MVNOs) can take advantage of this new business model:

MNOs can exploit its network capacity, IT infrastructure and service and product portfolio to acquire unserved segments, add a new revenue stream from wholesale business and reduce spare capacity and cost per user.

While an MVNO can exploit its brand awareness, distribution channels and customer base to provide customized value proposition and complementary services and products to its customers. MVNO ventures bring a new revenue stream, a low-cost entry strategy to the mobile market, a new vehicle to strengthen the value proposition and a potential initiative to increase customer acquisition and/or retention.

MVNO business models

The business model of an MVNO goes from branded reseller, where the venture just provides its brand and the MNO provides the entire operation, to Full-MVNO, where the MNO just provides the network infrastructure and the venture provides the rest. The choice of the business model will determine where the value creation and the value capture will occur along the value chain.

Additionally, a Mobile Virtual Network Enabler can be positioned between a host MNO and an MVNO venture to provide services ranging from value added services and back office processes to offer definition.

Example of MVNO positioning in Europe

There is no success formula, different MVNO initiatives have found success in their respective positioning over the last years in Europe.

Value added MVNOs

Leverage of an existing brand.
With differentiated/ exclusive content and services.
Success case: Virgin Mobile.

Convenience MVNOs

Target their existing and loyal customer base.
Price differential with traditional operators is not significant.
Exploit the access to distribution channel and the knowledge about their customers to design targeted offers.
Success case: Tesco.

No-frills MVNOs

Value proposition is based on low-cost and basic services (e.g. basically minutes and SMS bundle, online sales and absence of handset subsidies).
Low cost structure.
Oriented to specific segments such as budgeteer segment with low spending power.
Success case: Telmore, Simyo.

For more information about the MVNO market and the business opportunities behind it, please contact us.