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connectivity-telecomsJanuary 20249 min read

Why MVNOs Are Essential to Driving Competition in the African Market

Explores the MVNO landscape in Africa from the perspective of a decade-long MVNE operator. Covers the regulatory frameworks across different African markets, the role of MVNEs in bridging MNOs and MVNOs, and why the African market - with less than 1% MVNO share compared to 42% in the Netherlands - represents massive growth potential.

YA

Yaron Assabi

Group Founder & CEO

MVNOs and Competition

Photo by MVNE on Pexels

Why MVNOs Are Essential to Driving Competition in the African Market

I recently attended MVNO World Congress in Amsterdam, and it was great to see all the new developments in this market and how mature it is in Europe and US. The development of the eSIM and associated customer care issues were a big part of the conference from a B2C, B2B, and IOT perspective.

I founded MVNE in January 2013, so it has been over 10 years now that we have been educating the market. The journey has been filled with challenges, but great things are worth the pain and patience, and we have amazing projects throughout the continent which we are super excited about.

We act as the glue between the MNO (initially not receptive even though later they realise that this is more profitable as it fills their network) and the MVNO (which everyone assumes is an easy business, but it is actually quite complex with a very high mortality rate).

MVNE: The Enabler

MVNE is a technology and services company that helps large consumer-facing brands design, build and operate their own MVNOs, ultimately giving them more control over the entire mobile customer experience, access to rich customer information, and a means for non-comparative, sustainable proposition differentiation.

Our MVNE mitigates the risk through a consulting framework and unique business modeling tailored for our MVNO customers. We offer comprehensive services essential for MVNO's success, including getting the right customer value proposition to differentiate and win market share through business model innovation.

The African Opportunity

The African market has less than 1% MVNO market share, whereas the Netherlands has the highest market share in Europe at 42%. Germany is the fastest-growing market, with over 140 MVNOs and a growing market share. Despite a very competitive market in Europe, the market is still growing at 5.8% CAGR by 2030.

The Role of Regulation

We work with the regulators, who often play a crucial role in stimulating this market as they want to see fair competition. MVNOs do not have any spectrum assigned but acquire wholesale mobile telephony services from mobile operators and resell them to end users.

The regulator does not insist on acquiring an MVNO license in some markets like South Africa. In contrast, in markets like Namibia, Kenya and Nigeria, the regulator insists on a license for the MVNO. Regulation is essential and could continue to promote competition and assist in driving MVNO strategy to benefit the industry and end consumers.

Mobile Operators should be required to publish their terms and conditions to offer MVNO access, and these terms should be reasonable, equitable and applied in a non-discriminatory manner. MVNOs would also need to comply with consumer requirements such as KYC (Know Your Customer) or RICA in South Africa.

MVNOs: Benefits for Consumers and MNOs

In an increasingly digital world and fragmented telecommunications industry, MVNOs are on the rise, applying emerging technologies, exploring new verticals and offering value to both consumers and existing MNOs. Many MNOs have set up an MVNO or acquired their MVNO customers to innovate faster and create their own competition.

The subscriber acquisition cost in the wholesale business for an MNO is zero, and the Average Revenue per User (ARPU) in the wholesale business is only slightly inferior to the retail ARPU. As a result, the ROI on the wholesale business is significantly higher due to reduced complexity and the niche focus of MVNOs.

From the consumer side, MVNOs can provide more competitive offerings with lower costs without compromising service. Through segmenting the market, offerings can be tailored for different consumer needs, such as better large data bundles for streaming services.

Agility as a Key Success Factor

One crucial element in an MVNO being successful is the ability to be agile and adaptable. As the mobile market and opportunities change, so does the MVNO need to re-invent its customer value proposition. The MNO market has been sluggish in adapting its business model, which has directly impacted MVNOs capitalising on the market left open by MNOs.

Mobile Virtual Network Enablement for Best Success

One of the wisest things MVNOs can do when entering the market is to partner with an MVNE provider. MVNOs can partner with MNOs to launch a brand, but the MNO offering is only partial, lacking flexibility, expertise and the agility to bring an MVNO to market quickly.

MVNEs have emerged as an interface platform between the MVNO and the Host MNO, bringing efficiency to the supply chain by optimising MVNO launching and subsequent operational processes. An MVNE provides multi-tenancy, scalability, security, transparency, operational efficiency, low operating costs, and carrier capability without lock-in.

An MVNE should offer pay-as-you-grow business models that provide flexibility and agility in an ever-evolving market.

#DoingSomethingGreat is capitalising on the fast-changing mobile environment to offer a unique customer value proposition for customers that combines your core business value with mobile.