Global mobile connections have reached 5.3 billion in 2010 and are expected to hit over 7.5 billion by the end of 2015. In spite of the tough economic environment of 2008-2011, we are now facing a slow recovery in terms of year-on-year growth worldwide with the exception of Europe. Despite data services growth in importance, global revenue growth still depends on voice revenues and appears set to remain the greatest contributor to mobile Operators’ revenues in the coming years. On the other hand, as mobile technology advances faster than ever before, the demand for bandwidth and wireless usage is increasing exponentially, therefore many opportunities are arising to exploit these types of services.
- Low CAPEX – small steps towards success
With an appealing service model, the entry threshold for MVNOs to start their business and gradually adapt their business even with a small customer base is becoming a viable business.
- Low OPEX cost base
Lower CAPEX, reduced volumes of operational activities and limited employee numbers enable MVNOs to achieve sustainable margins with lower retail tariffs and far fewer customers than incumbents provided that they develop an auspicious business model and negotiate a favorable HNO agreement.
- Integrated marketing increases customer’s lifetime value
By focusing on specific niches, launching personalized campaigns and offering appealing content-based services or fashionable or cost effective handsets, MVNOs can leverage their brand and enhance their customer base and at the same time enjoy a lower than average customer churn rate through service personalization. Customer lifetime value might increase as MVNOs can enhance their service offering with targeted bundles and cross-selling activities. By addressing specific needs the quality of service increases and the perceived value of their product offering is maximized. In the case of incumbents, such promotions might cannibalize existing profitable customer segments.
- Maximized efficiency and gaining a competitive advantage by using brand new operational systems In comparison to incumbents, which have complex, hard to manage and maintain, MVNOs start their business using uncluttered new systems which can give them a distinct advantage from the outset.