Eduardo Servin, CEO of YU Movil shares a story about the innovative MVNO business model launched in Mexico.
About Mexican telco market?
In Mexico, there are presently over 150 MVNOs, yet not all of them prioritize profitability; some solely focus on acquiring subscribers. For example, Walmart launched an MVNO three years ago and has garnered 6 million subscribers, but only a fraction of them are profitable users. On the other hand, despite being the most expensive operator in Mexico, America Movil, with a 60% market share, earns 70% of the total market income. This highlights that success in the MVNO sector is more about quality of service and customer-centric approaches rather than low-cost strategies. In his previous MVNO venture with Grupo Elektra, Eduardo attained 1 million subscribers two years ago, achieving an Average Revenue Per User (ARPU) of $10, which is double the market average. This led to a profit of $10 million USD, showcasing the potential for profitability in the MVNO market.
New frontiers - Why is Yu Movil unique?
As the previous venture with Grupo Elektra drew to a close, Eduardo made the decision to embark on a new MVNO venture, leveraging his extensive experience in launching successful MVNOs and his strong relationships within the mobile device supply chain. This initiative led to the establishment of Yu Movil, which focuses on selling mobile phones bundled with prepaid annual plans. It is noteworthy that the Mexican market predominantly favours prepaid plans, accounting for approximately 85% of the market share. However, their objective was to also provide annual plans with financing options.
More importantly, they believe in the power of person-to-person recommendations, leveraging multi-level service to earn income. If individuals believe in the products they use, they can recommend them and earn money. All operations are managed through a single application, covering six key elements: product, channel, logistics, customer service, and technology. It's worth mentioning that we boast the best coverage in Mexico across all these aspects.
Yu Movil collaborates with three major networks, namely Telcel (América Móvil), AT&T and Altan, to provide extensive network coverage. However, their product strategy emphasises prioritizing sellers, with established contingency plans to rectify any service delivery issues promptly.
So, the network is exceptional, but it doesn't end there; Yu Movil also offers coverage throughout North America. With Roam Like Home, customers enjoy seamless connectivity in the United States through T-Mobile and in Canada as well.
Regarding their product offerings, Yu Movil provides annual prepaid plans with 2% financing. For just $45 annually, subscribers receive unlimited calls, unlimited SMS, and the flexibility to tailor their plans to their preferences. All plans come with a data package, priced at $2 per gigabyte with no expiration date.
Why focus on the device market?
This focus is driven by Mexico's annual market of 40 million cell phone sales, supported by 60,000 salespersons. Yu Movil facilitates this process through a marketplace where customers can purchase phones alongside airtime, offering seamless airtime replenishment options. With over 12 years of retail experience, Eduardo has cultivated strong ties with cell phone manufacturers and agents. That’s why Yu Movil distribution channels emphasise person-to-person interactions. It encompasses not just business-to-consumer (B2C) but also business-to-business (B2B) relationships, as agents may engage with procurement professionals in companies. Thus, it entails both B2B and B2C dynamics, as individuals recommend products and earn commissions.
What is planned for the future?
Their objective is to cultivate a comprehensive experience, where individuals are nurtured and deliveries are ensured. While currently maintaining physical operations, they are transitioning towards a digital platform characterized by security, traceability, and integration with all available application features. Prioritising human interaction, their call center is manned by personnel, reflecting their commitment to resolving issues through personal engagement. Although basic IVR systems are in place, customers always have the option to converse with a live representative. Yu Movil remains open to exploring opportunities in other markets, given the scalability of its model.