Before launching, MVNOs must consider that they will have to be in the business for at least one year before they break even. MVNO launch is usually preceded by six months to one year of start-up costs. Furthermore, they have to consider the post-launch subscriber acquisition costs which vary from country to country. These costs can delay an MVNO’s EBITDA breakeven and require considerable investment.
MVNOs need to have a worthy story, a source of differentiation and they must strive to secure a network deal at an attractive wholesale rate. Furthermore, they should carefully select their vendors and think of a flexible business model that would enable them to keep pace with the rapidly changing mobile industry. Additionally, they need to have a clear technology roadmap and be prepared for the transition from 3G to 4G and focus on following current trends, keeping pace with technology developments and anticipating future trends.
Most analysts agree that key success factors for MVNOs to keep debt and costs low are to have staff that understand the whole end-to-end process of mobile service delivery or work closely with highly experienced partners. Only the larger and stronger MVNO models are robust enough to justify the significant infrastructure investment of the MVNO.
Key success factors – keep it simple
There are several steps to follow that might increase MVNOs’ chances of success:
- Build a pragmatic and competitive business plan and choose the revenue stream sources carefully (call charges, data usage, applications, advertising, bundling or other service)
- Build an attractive business case for the HNO of choice
- Correctly evaluate the current value of the brand (in case of existing brands) and focus on enhancing it and on finding means to transpose it into new markets
- Choose business executives with strong skills and deep insight into wireless economics, technology and competitors
- Assess the value of your existing customer base and choose the targeted niches carefully based on the segments you already cover and strive to get further insight into these segments in order to be able to differentiate with tailor-made services
- Reduce the costs pertaining to location (rentals), headcounts, acquisition of systems not really required by the present business model etc.
- Build a compelling go-to-market strategy, assess the value of the existing distribution channel for the go-to-market strategy and find the means to diversify and widen it, adapting it to the target customers
- Prepare for Convergence and the Triple Play Market
- Prepare a roadmap for the innovative services to be brought to the market in the coming years and continuously follow and evaluate the latest industry’s trends
- Create an innovative and attractive mix of products and services or embrace a multi-brand concept-tailored offer supported by an adequate infrastructure in affordable price ranges
- Carefully design your business infrastructure:
- HNO of choice based on careful and empirical evaluation
- Distribution channel enhancement strategy to support logistics, enabling faster time-to-market
- Technical infrastructure, from core network systems, SDP through to best-of-breed solutions for BSS/OSS from messaging, voice, data session control, voucher management, real time rating and charging, provisioning, order management, CRM and analytics
- Best-of-breed partners for content, distribution, devices, applications and prepare a mutual beneficial use cases before starting to negotiate with each of them