MVNO Market Overview
The global MVNO market was valued at $55,129.63 million in 2017 and is forecasted to witness a CAGR of 9.7% during 2018–2023. MVNOs focus largely on customer, community, and value-added services. Technical flexibility can be viewed as a major factor driving the market growth during the forecast period. Although the growth in the number of new telecom subscribers is expected to slow down considerably during the forecast period, owing to the maturing telecom market in developed countries, the rising demand for mobile internet in developing countries is expected to provide significant growth opportunities to the market players.
GLOBAL MVNO MARKET, BY CATEGORY, $M (2013 - 2023)
Based on type, the MVNO market has been categorized into discount, telecom, media/entertainment, business, retail, migrant, cellular M2M, and roaming. Among these, the discount category contributed the largest revenue to the market in 2017. During the forecast period, the market for the roaming category is projected to grow at the fastest pace, as MVNOs in several countries are taking new initiatives, such as comprehensive roaming tariffs, to encourage people to travel more frequently, which, in turn, will increase the demand for roaming offers.
On the basis of category, the market has been classified into prepaid and postpaid MVNOs. The postpaid category held a larger share in the market in 2017. During the forecast period, the trend is projected to reverse, as prepaid MVNO revenue is anticipated to surpass that of postpaid MVNO by 2022. This is because of the growing mobile penetration in developing countries of Asia-Pacific, Africa, and Latin America, where prepaid schemes like pay-as-you-use are more preferred over postpaid schemes, which carry fixed monthly rentals, irrespective of the usage.
The MVNO business model is evolving, with changes in the industry dynamics and the regulatory environment. Players in the market are shifting from discount-based approach to a more value-based approach. The balance between cost and product differentiation is expected to have a high impact on the business model during the forecast period.
North America is one of the most developed MVNO markets in the world, second only to Europe in the total number of user subscriptions. In 2017, North America ranked third in the total number of MVNOs, with Europe leading the market, followed by Asia. In Western Europe, MVNOs are encouraged and supported by telecom regulatory bodies. During the historical period, Western Europe witnessed the highest MVNO penetration among all the regions. The success of MVNOs in Western Europe has led to an increase in the level of competition among telecom operators, resulting in reduced prices of telecom services in the region.
MVNO Market Dynamics
In recent years, competition in the MVNO market has shifted from pricing to value-added services and product differentiation, owing to the dominance of mobile network operators (MNOs) in the low-cost cellular services market in both developed and developing countries. Moreover, collaborations between MNOs and MVNOs have strengthened in recent years. The stiff competition among MNOs has led to the underutilization of a large portion of the spectrum. Hence, MNOs with below par growth rate are looking for MVNO partners for the optimum utilization of their resources.
Although traditional full MVNOs accounted for the majority of the market revenue in 2017, new players are entering the market, with focus on value-added services, to gain traction. Banks, smartphone vendors, supermarkets, and media companies have entered the market with new business models. These new players are giving stiff competition to the existing players in terms of cost differentiation. As a result, traditional players in the market have started focusing on value-added services, such as managed services, internet protocol private branch exchange (IP PBX), and business solutions, instead of price differentiation.
Segment-targeted pricing and innovative marketing strategies such as use of social media are the key factors driving the MVNO market in developed countries of Western Europe and North America. The growth of triple-play and quadruple-play services is expected to be a major driver for the African market during the forecast period. The growth of the MVNO industry largely depends on the limitations of MNOs in terms of their marketing and distribution strategies. Successful MVNOs make optimum utilization of the existing telecom infrastructure, such as media and telecom, channel infrastructure, and customer database of MNOs.
MVNOs differentiate themselves from MNOs in terms of pricing and user experience, by offering low-cost and easy alternatives. The effective partnership between MNOs and MVNOs is expected to have a high impact on price sensitivity in the telecom market. Several new MVNOs with specific target audience are planning to enter developing countries, where the market is in its embryonic stage. However, high price sensitivity along with lower average revenue per user (ARPU) is acting as a roadblock to the growth of the market.
Developing countries are proving to be huge potential markets for the MVNO industry. In 2014, China opened its telecom market for MVNOs. With a telecom subscriber base of more than one billion, China continues to provide ample growth opportunities to the players in the market. Likewise, in India, the opening up of the Indian telecom market for MVNOs is expected to provide growth opportunities to the players.
MVNO Market Competitive Landscape
Some of the major companies operating in the global MVNO market are AT&T Inc., Verizon Communications Inc., T-Mobile AG, CITIC Telecom International Holding Limited, Truphone Limited, Telefonica S.A., Virgin Mobile, Tracfone Wireless Inc., and Lycamobile Group. The overall intensity of rivalry in the MVNO market is medium. Competition in mature markets of North America and Europe is high in the industry. While, competition is relatively low in Asia-Pacific and Africa due to large amount of unutilized mobile spectrum and limited players in the region.