For every company that succeeds, five fail and another 50 don’t even get off the ground. This brutal statistic from the mobile virtual network operator (MVNO) space shows how intense the fight is for the niche segments and slim margins that define the sector. It also raises critical questions for any company interested in launching an MVNO — including the rising number of traditional mobile network operators (MNOs) that are considering creating one of these low-cost, innovation-driven brands for themselves.
In this Viewpoint, we analyze this ultra-competitive space and explain what market leaders are doing to keep themselves ahead of the pack. We define five must-haves and five nice-to-haves that can combine to create the operational efficiency and unique market positioning that all top MVNOs possess.
The regulatory environment plays a vital role in MVNO success. Take the EU, where a mandate on open network access for MVNOs at nondiscriminatory wholesale rates has enabled substantial growth for these firms.
In Australia, Amaysim has made the most of liberal regulations requiring MNOs to offer wholesale access to MVNOs, gaining 1.3 million subscribers by leveraging the Optus network.
Conversely, restrictive regulatory environments can stifle MVNOs. Complex licensing procedures, limitations on foreign ownership, and controls on infrastructure have made it difficult for new players to establish themselves in India, China, and Thailand.
Thriving MVNOs are addressing unmet customer needs often overlooked by MNOs. Galatalk, the MVNO of Turkish football club Galatasaray, carved out a niche by appealing to fans, with benefits including free club merchandise and VIP membership for premium users.
International travelers have been attracted to eSIM provider Airalo, which enables quick and seamless connections across the world thanks to its partnerships with a host of local network providers.
Network traffic costs vary widely for MVNOs depending on the host MNO and targeted customer segment. A larger customer base can strengthen an MVNO’s bargaining position but doesn’t always guarantee lower rates. Buying data units in bulk can reduce costs by 15%-30%, but this requires detailed knowledge of customer demand and the ability to accurately predict demand.
Dynamic pricing mechanisms with MNOs are also needed, with options including semiannual price adjustments or changes based on market trends.
Affordable plans that don’t compromise the customer experience have helped get Giffgaff in the UK, Pepephone in Spain, and Hofer Telekom (HoT) in Austria where they are today. Giffgaff’s community-powered model incentivizes customers to help each other through online forums, cutting support costs, and enabling competitive pricing. HoT has created value by pairing its “no price hikes” policy and mobile plan improvements. Its 9% market share shows that competitive pricing is nonnegotiable for MVNOs.
Straightforward approaches also win customers. Mint Mobile, which was acquired by T-Mobile for US $1.35 billion in May 2024, offers three plans that customers can purchase in bulk (three, six, or 12 months) and uses discounts to incentivize them to choose bigger bulks.
Tello differs by offering fully customizable plans that meet specific customer needs, but pairs this with preset plans for hassle-free choices, while Spark NZ has won over tweens and teens on tight budgets by offering weekly rather than monthly plans.
MVNOs can build upon businesses already in operation, leveraging their infrastructure, customer base, and the trust they have built up with clients. One example is France’s La Poste Mobile, which used its postal network to offer mobile services. It captured a 4% market share before being sold for over $1 billion. Infrastructure, in particular, can differentiate and further propel MVNO business, compared with fully digital MVNOs.
Successful MVNOs often outsource network access and customer-facing services to mobile virtual network enablers (MVNEs). These firms provide the IT backbone for roaming agreements and technical interfaces. Giffgaff outsources much of its network management to Telefónica’s O2 through an MVNE.
Outsourcing also ensures scalability without significant capital investment. However, MVNOs must retain ownership of key processes and tasks, such as online charging systems, product development, and management processes.
High-performing MVNOs stand out by offering innovative, niche-focused services. Polish firm CrossMobile’s AI-powered add-on Care4Kids provides parents with information about their children’s online activities. “With up to 20% of our customers opting for this service, it highlights the potential of targeted, value-added features,” says CEO Tom Tromer.
Fliggs Mobile has tapped into a very different market, appealing to tech-savvy users by rewarding them with cryptocurrency for using mobile services.
To optimize costs and management of their network access, MVNOs need to use data analytics to forecast customer usage. This helps them negotiate better bulk pricing deals with MNOs, and when combined with flexible wholesale data package deals from the network access provider, this can lower average wholesale costs per GB by up to 70%.
MVNOs can target and retain niche customer segments with tailored and creative campaigns, as shown by Mint Mobile’s endorsements by actor Ryan Reynolds and Austrian MVNO Spusu’s promotion with football star Anton Polster. Other creative tactics include Virgin Colombia’s per-second billing and HoT’s data rewards for goals scored during the 2024 UEFA European Football Championship.
These 10 traits provide a foundation, but to sustain growth MVNOs must keep building their understanding of customer needs and adapting to market and technological changes, such as eSIMs, flexible pricing, or custom plans.
With extra competition from MNOs that are applying MVNO strategies to launch second brands or start joint ventures targeting specific customer segments, MVNOs have more to do than ever to stay a step ahead.
By Christoph Uferer, Guillem Casahuga, Peter Nussbaumer, Daniel Guzmics, Maximilian Schitter
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