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A review of the changing MVNO landscape

Throughout the forecast period, Europe is predicted to be the largest MVNO market.

Like the majority of sectors, the MVNO market was negatively affected during the pandemic. Although the majority retained their customers, the closure of stores led to a decline in new ones.


Despite this, it’s predicted that revenue generated by the MVNO market will witness a 7.1% CAGR between 2021 and 2031, eventually reaching $139,663m.


Throughout the forecast period, Europe is predicted to be the largest MVNO market. This is owing to the high disposable income of Europeans, which allows market players to charge a higher price for their services.


In order to dominate the competition, MVNO market players are widening their service portfolio.


Key factors behind the growth of the MVNO market are:

• The rising demand for triple-play services

• Innovative distribution strategies and segment targeted pricing of MVNOs

• Increasing requirement for low-cost mobile plans


James Gray, Managing Director at Graystone Strategy, sets out the ramifications for the sector of the pandemic-driven disruption…


“COVID had a number of fairly obvious impacts on MVNOs and telecoms in general.


The first was distribution. People were locked in their houses for a long periods time, and many MVNOs – particularly the likes of Lebara or Lyca – are quite reliant on retail distribution, such as people on the high street selling SIM cards. This of course came to a halt, which in turn had significant implications.


Those with the least well-developed digital journeys, brand awareness and effective marketing were the most adversely impacted – not least because people have to know about your website to go to your website; they’ve got to know about your proposition to buy your proposition.


There is a flipside to that though, of course, which is that generally MVNOs are cheaper than the main network operators. What this means is that, as there was a higher degree of uncertainty and as people became more concerned about their finances, it made sense for them to look to obtain better deals. This provided opportunities for some MVNOs – those that were able to get their proposition out there and fulfil the journey digitally.


The second impact was around consumption. As I said earlier, the majority of us were locked in our houses, but were fortunate enough to have Wi-Fi. Most people’s phones will prioritise Wi-Fi for both voice and data above the macro-mobile network. This means that the consumption of products over the mobile network would have dropped. That would probably have a positive margin impact for the MVNOs because a great deal buy their wholesale deals based on consumption: you use a certain amount of gigabytes and in turn pay per gigabyte.


So, when customers are still using those gigabytes, but over their Wi-Fi network, the MVNO incurs no cost. That, therefore, might have had a positive impact on their margins. To be honest, everyone in telecoms experienced that. The consumers were still making calls and using their phones, it’s just the network that they’re doing it across is different, because it’s through their Wi-Fi. And, of course, there’s also been a big transference of calls away from mobile onto applications like Zoom and Teams.


The third area of revenue that took a huge hit was roaming. No-one could go anywhere! This kind of revenue, depending where you as an MVNO roam, can be very, very positive. ‘Rest of the world roaming’ is quite a high-margin product. The fact that people weren’t travelling would have been positive for MVNOs because they wouldn’t have had to take a charge for the roaming, meaning, in many cases, that they aren’t allowed to onward bill the customer. That would have been good for the general MVNOs, but for those that specialised in roaming, it would have been a total disaster.


My final point is actually around something that affected everybody – not just MVNOs or even telecoms generally. That’s the idea that the whole consumer mindset changed over the course of the pandemic. Without a shadow of a doubt, it accelerated the move to digital, meaning that people are more likely to be buying goods and doing their research online. It’s accelerated the demise of the high street, too, which has resulted in less choice when it comes to available mobile phone stores.


In general, it’s made things much more polarised. If you’re someone that’s very comfortable online or could get comfortable online, the chances are you moved into digital-only channels. If you’re someone that isn’t that way inclined, or doesn’t have the capabilities, it’s made doing things much more painful. If you don’t know how to action things like checking your usage on your app, or ordering a SIM online, then a lack of alternative is going to make your life significantly more difficult. That’s something all MVNOs should, in some shape or form, pay heed to.”