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Pyramid Research analyst Guy Zibi believes that emerging markets present a new opportunity for aspiring mobile virtual network operators (MVNOs) worldwide. While developed markets worldwide are seeing increased MVNO competition – more than 40 existing and planned MVNOs are in the US, and Europe has over 100 – emerging markets have yet to really enter the fray. A new report from Pyramid Research titled, “MVNOs in Emerging Markets,” argues the case for MVNOs in developing markets like India, Nigeria and others.
Obviously, conditions in emerging mobile markets will require inventive modifications to the current developed-market MVNO business plan, but with the right changes, it is a viable option in some markets. Zibi adds, “Emerging market MVNOs must be more cost-efficient than their developed market counterparts; they must also be more cost-efficient than emerging market mobile operators, most of whom are already fairly creative in keeping costs down.”
MVNO success in emerging markets will rely on the ability of providers to account for the specificities of each market. Overall, there will be limited uniformity in successful models because of market peculiarities. From the Middle East to South East Asia and Africa, emerging markets are different; Zibi comments “The Middle East, for example, is ripe for a next generation, data-focused MVNO. India and Nigeria, on the other hand, may see more success from cost-driven models.”
The ‘affinity MVNO model’ is most optimal for most emerging markets; it extends the reach of the network without fully cannibalizing existing subscriber bases. According to the report, the main challenge prospective emerging market MVNOs face is not necessarily low ARPU, but network capacity and the extension of the addressable market. Zibi contends that an MVNO can potentially survive on $4-$5 average revenues per user (ARPU), but the MVNO model must be re-adjusted to make this possible, largely on the cost side. To accomplish this, MVNOs must find a so-called ‘weakest link’ incumbent willing to lease capacity as most operators are unlikely to open their networks.
Related Resources:
MVNOs in Emerging Markets
Pyramid MVNO Resource Page
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