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Overview
The mobile virtual network operator (MVNO) model has gained
popularity over the past 2–3 years; more ventures have
followed in Virgin’s path (the model’s pioneer), with the MVNO
model going through a number of iterations. As the MVNO market
continues to expand, a new category of players, MVNEs (Mobile
Virtual Network Enablers), has emerged, riding on the
coattails of strong MVNO growth.
Today, concerns about overcapacity and potential consolidation
are emerging, in both the MVNO and MVNE spaces. In a bid to
ascertain whether such concerns are justified, this report
focuses on answering:
Are MVNOs Making Money?
Our analysis has found that the MVNO model is a lot less
financially attractive than the hype would suggest. MVNOs have
to improve one or more of the following wireless operating
metrics in order to make money: CPGA (cost per gross
acquisition), CCPU (cash cost per user), ARPU, and churn.
Available MVNO data certainly provides enough fodder to
question the MVNO model, at least in its initial iterations.
Virgin Mobile UK is profitable (more of an exception than a
rule) but the company has been in operation since 1999.We
believe most other MVNOs are at the loss-making to slightly
above break-even level.
Are MVNEs Here to Stay?
The future of the aggregator MVNE hinges on the development of
small, niche MVNOs. If the MVNO segment moves towards a
fragmented marketplace with dozens of players serving small
niche segments, MVNEs will ride the coattails of such an
expansion. If, by contrast, the MVNO space is dominated by a
small number of large, Virgin-like players, the future of the
aggregator MVNE becomes somewhat doubtful.
MVNO service revenue has been expanding in line with the
growth of virtual operator subscriber bases, but is that
enough to sustain the MVNO business model?
This report examines MVNO profitability and the MVNE business
model, opportunities and future landscape for their services.
We ask – and provide answers to the following questions:
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Are MVNOs making money?
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How are MVNOs key performance indicators doing?
(ARPU, CCPU, CPGA, etc.)
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What is the profitability potential of the next
generation MVNOs, such as Mobile ESPN, Helio and Amp’d?
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How do we see the future of the MVNO?
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What is an MVNE?
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Do MVNOs need MVNEs? Is the MVNE model here to
stay?
Target Audience
Mobile Operators
Quantify the long-term revenue potential of the wholesale
market to support decisions whether or not to work with MVNOs
and MVNEs. The MVNO profitability calculations help you to
benchmark your performance against MVNOs.
MVNOs
Develop your strategy using our objective long-term analysis
of the MVNO market. Benchmark your costs and profitability
against industry averages and other key players. Determine
whether MVNEs will strengthen your service and increase your
profit based on our analysis.
MVNEs
Understand the long-term market potential and MVNO perception
of MVNEs. Determine an optimal strategy to attract MVNOs
(end-to-end solutions vs. specific expertise). Assess key
competitors and benchmark your positioning against them.
Vendors
Assess the MVNE opportunity for a long-term strategic entry
(partnerships or acquisitions), determine if MVNEs are
competitors or complimentary and if there is an opportunity
beyond applications hosting. Quantify the long-term equipment
and service opportunity in the MVNO space based on revenue,
profitability and subscriber forecasts.
Financial Institutions
Assess the viability of MVNOs and MVNEs to support a decision
to finance MVNOs/MVNEs (or not). The MVNO profitability
calculations (NPV, CPGA, CCPU and ARPU) help you to benchmark
existing and proposed MVNO costs and profitability.
Virtual Players Analyzed
MVNO
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Virgin
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Tracfone
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Telmore
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Mobile ESPN
MVNE
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Visage Mobile
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Telcordia
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mPortal
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Versent Mobile
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TynTec Limited
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