Presentation On MVNO (Mobile Virtual Network Operator)

Presentation on MVNO
( Mobile Virtual Network Operator)

Mobile virtual network operator
A Mobile Virtual Network Operator (MVNO)

is a company that provides mobile phone services
but does not have its own licensed frequency
allocation of radio spectrum, nor does it necessarily
have all of the infrastructure required to provide
mobile telephone service.
MVNO purchase wholesale mobile minutes and

resell to end-users.
MVNOs are roughly equivalent to the "switchless
resellers“.
It works independently of the mobile network operator

and can set its own pricing structures, subject to the rates
agreed with the MNO.
They do not have their own SIM-cards and the services

provided by service providers depend on the services of
the hosting MNOs .
Background and history
The emergence of the MVNO model in a market is

often a result of two factors-
1) To lower the barriers for market entry and

ultimately increase competition.
2) A strategic decision by an MNO looking to extend its

existing operations and target niche or undeserved
segments through a second or perhaps multiple
brands.
The efficiency is obtained because an MVNO doesn’t
incur the significant capital expenditure on spectrum
and infrastructure that an MNO.
The regulator forced Host Network Operators

(HNO's) to open their network & it created a
potential competitor for them. They were being
forced into a commercial relationship that would
eventually have a negative impact on its revenues.
Conversely and more recently many mobile network
operators believe that there is merit in operating a
wholesale MVNO business unit, to compliment their
retail model.
The first commercially successful MVNO in the UK

was Virgin Mobile UK, launched in the United
Kingdom in 1999 and now has over 4 million
customers in the UK. Virgin replicated its UK success
through its US operation Virgin Mobile USA.
Mobile operators and MVNOs
 There are three primary motivations for mobile operators to

allow MVNOs on their networks. These are –
 Segmentation-driven strategies:
Mobile operators often find it difficult to
succeed in all customer segments. MVNOs are a way to
implement a more specific marketing mix, whether alone or
with partners and they can help attack specific, targeted
segments.
Network utilisation-driven strategies

Many mobile operators have capacity,
product and segment needs. An MVNO strategy can generate
economies of scale for better network utilisation.
Product-driven strategies :
MVNOs can help
mobile operators target customers with specialised
service requirements and get to customer niches that
mobile operators cannot get to.
Virgin-Tata Deal
Virgin Mobile is present in six countries — the US,

the UK, France, South Africa, Australia and Canada.
Virgin Mobile India, a 50:50 joint-venture between
UK’s Virgin Group and Tata Teleservices (TTSL)
It is based on co-branding/brand franchising model.
Tata Tele will pay Virgin a royalty for the use of its
brand and a share, per subscriber, of its future
revenue. Tata Tele will take care of billing and
customer care, refrain from selling airtime minutes
in bulk to Virgin, and retain its subscribers.
 What Virgin would do is bring its customer service
expertise to the table and help Tata Tele train its call
centre staff. This is a better way to enter into the
growing Indian telecom market. There is no capex
burden and the exit option is also easier.
The urban youth mobile services revenue is expected

to cross Rs 35,000 crore by 2010.
Controversy
The Cellular Operators Association of India pointed out

that the partnership between Virgin Group and Tata
Teleservices has taken place through the back door under
Mobile Virtual Network Operators (MVNO) route to
enter into the Indian telecommunication market.
The group further pointed out that the present Indian

telecommunication licensing agreement clauses prevents
buying of mobile capacity from an existing operator and
subsequent selling of mobile services under its name is
also prohibited under the law.
The authority of reallocation of spectrum lies with
the Indian Department of Telecommunication.
Pointing out that MVNO’s definition worldwide

included two things — buying of bulk air time under
contract from an operator & reselling of minutes as
well as customer ownership, Tata Teleservices said,
“None of these are applicable or relevant to TTL’s
launch of Virgin Mobile branded services.”
As per the agreement, there would be two brands —
Tata Indicomm and Virgin. While Tata Indicomm
would be positioned as a mass-market brand, Virgin
would be positioned as a youth brand.
Key Reasons for the deal
The surveys and reports showed that Tata were not

able to penetrate the youth segment as they had done
with other customer segments.
For the Tatas, the current move was an attempt to

gain ground as they had a market share of less than
10% ( around 7.1%).
 The company had tied up with Virgin due to its

better recall value and positioning among youth
globally.
Advantages
This deal gives it a first-mover advantage. Whenever

regulations permit MVNOs to operate in India,
Virgin would already be a recognised brand.
When Tata Tele offer GSM services , the current
relationship can be easily tweaked for a GSM run. It's
a win-win situation for both sides.
The move will give Virgin Mobile instant access to
Pan-India network.
 Tata Tele they will get a recognized brand with a
sound marketing plan to attract more subscribers.
Thus the operator gets to maximise returns on
spectrum while the foreign player rakes in revenues
without having to buy airtime.
The high churn rate (once number portability kicks

in) will also help them.
Indian Challenge
Countries like India or China, where consumers are

price-conscious, larger operators are in a better
position to offer competitive pricing due to
economies of scale.
That may be a (better) way to enter the market, but
they may have no significant market share at the end
of the day.
The profit margin of MVNOs rarely crosses 20%, and
with the prepaid segment being a low-paying market,
the business plan and positioning has to be right.
The brand hype will die after sometime, and then it
will all boil down to quality of service, pricing and
product suitability.
!!!!!! Thank You !!!!

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Presentation on MVNO

( Mobile Virtual Network Operator)

A Mobile Virtual Network Operator (MVNO)

MVNO purchase wholesale mobile minutes and

It works independently of the mobile network operator

They do not have their own SIM-cards and the services

The emergence of the MVNO model in a market is

1) To lower the barriers for market entry and

2) A strategic decision by an MNO looking to extend its

The regulator forced Host Network Operators

The first commercially successful MVNO in the UK

 There are three primary motivations for mobile operators to

Network utilisation-driven strategies

Virgin Mobile is present in six countries — the US,

The urban youth mobile services revenue is expected

The Cellular Operators Association of India pointed out

The group further pointed out that the present Indian

Pointing out that MVNO’s definition worldwide

The surveys and reports showed that Tata were not

For the Tatas, the current move was an attempt to

 The company had tied up with Virgin due to its

This deal gives it a first-mover advantage. Whenever

The high churn rate (once number portability kicks

Countries like India or China, where consumers are

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