Assuming local regulations allow the establishment of an MVNO, the short answer is, of course, “just about anyone”. However, experience in Europe and the US has shown that MVNOs make sense for some businesses more than others.
Companies with an existing customer base
There is no doubt that companies with existing distribution and customers have a real advantage in establishing an MVNO. A trusted brand, existing customers and an existing distribution and billing operation makes success in offering a telecom product much more likely.
There are multiple reasons why existing companies offer MVNO products to their customers:
- as part of a brand extension strategy to increase revenue per customer (supermarkets, for instance, adding insurance, fuel, telecoms, banking, etc)
- as part of a strategy to reduce churn by increasing the complexity of churning (utilities, for example, who suffer from commodity products such as gas or electricity and for whom contestability in markets reduces their ability to hold onto a customer)
- existing calling card operators with existing distribution and brand familiarity find that adding an MVNO offering to their product mix helps combat the competition from newer MVNOs in their markets
Pure MVNO operations
Pure MVNO operators, however, are amongst the largest MVNOs today, boasting millions of subscribers, but this doesn’t mean they needed millions in VC funding and wall to wall TV advertising. In a curious paradox, it has often been the best funded MVNOs with the most illustrious ex telco management which have failed.
In many cases the most successful pure-play MVNOs today have grown from a standing start (and often fuel their astonishing growth entirely out of cashflow). Management in these companies displays a uniform focus on the bottom line, competitiveness in product and pricing design, product innovation and tight control over costs.
Hebitel believes that good business people (not necessarily with a telco background) who are dedicated to their distributors and customers, can closely manage costs and are rigorous in managing their product have a great opportunity to build a profitable and valuable MVNO operation.
We’d love to help you look at the possibilities of launching an MVNO in your country.