Sep 03, 2015

Key Factors to MVNO Success in Latin America

By Samia Bounaira

This article was featured in the August 2015 edition of Latin America Telecom, a monthly newsletter covering communications development in Latin America.

Mobile Virtual Network Operators (MVNOs) entered the market nearly 25 years ago and continue to evolve around the world. Today, MVNOs have reached 214 million users worldwide, and that number is estimated to grow to 300 million by 2020. As the user base grows, so too is revenue.

Excelacom MVNO Quick-Facts
MVNO Quick Facts

With the MNVO market expected to reach over $70 billion globally by 2020, its steady growth around the world is supported by a rapid growth in Latin America (LATAM). Also, with approximately 70 of 227 mobile markets hosting MVNOs today, there is plenty of opportunity for new market expansion around the globe.

MVNOs are altering the competitive environment, targeting specific market segments with attractive customized offers. However, the business characteristics of MVNOs in LATAM are different from the model implementations that we have seen in the rest of the world. For example, MVNOs in Western Europe or Asia-Pacific are traditionally promoted by non-telecoms, whereas in LATAM, the first phase of MVNOs has been driven by Telecom operators and is based on the potential of a strong prepaid market.

LATAM is currently the hottest MVNO region, with Chile, Colombia and Mexico having the strongest momentum in MVNOs assets. Other countries such as Peru and Argentina are showing growth patterns.

Despite the growth potential for the LATAM region, the market is characterized by decreasing ARPU, income disparities and regulatory constraints, as well as lack of spectrum capacity. As a result, the market needs to be ready to face such challenges.

One of the key factors for the proliferation of MVNOs in LATAM is the availability of sufficient radio spectrums from the Mobile Network Operators (MNOs) to sell capacity without negatively impacting their own businesses. Another factor that needs to be considered is the MNO rates for renting capacity to MVNOs, for example, they cannot be too expensive and there can be no anti-competitive practices against the MVNOs. The MNO-MVNO business relationship is fundamental to success.

Key Factors to MVNO Success

In this regard, agencies in Latin America are making significant efforts to regulate the market to increase the amount of spectrum allocated for mobile services with acceptable business practices. The priorities include the approval of the deployment of antennas and the construction of towers, all while minimizing bureaucracy. In Mexico, the hope is that the MVNOs take off with the project implementation of the shared network in 700 MHz spectrum bands impulsed by the Mexican telecommunications and transport ministry (SCT).

Nevertheless, the availability of capacity is not the only success factor. MVNOs must have a viable business strategy that is driven by the complexity of the offering. The business strategy must support solid brand positioning, and MVNOs must invest heavily in advertising to position their brand. An MVNO, such as Virgin Movil, which established itself in Mexico, Colombia and Chile, can exploit its brand name. The business strategy really sets the stage for success. MVNOs need to consider:

  • Startup costs
  • Post-launch subscriber acquisition costs
  • Differentiators to survive in the market
  • An agile approach to remain flexible in a rapidly changing industry
  • A clear technology roadmap with a focus on the future
  • Strong partnerships with highly experienced partners

Another key factor for success is customer perception. The niche customer should not perceive any differences in performance attributable to network services. This is where a concrete delivery plan is required with tight coordination with MNOs for prompt troubleshooting and efficient operation of the integrated processes.

Last, but not least, the funding capacity which the MVNO possesses to effectively serve as a virtual operator is also very important.

MVNOs in LATAM need to overcome challenges that are similar to those of a start-up company, such as the scarcity of specialized workforce, the reduced experience of management teams with hands-on experience in launching successful MVNOs, somewhat limited knowledge in strategic business planning for launching successful MVNOs, and minimal technological and architectural knowledge of the MNO / MVNE / MVNO ecosystem.

Research shows that only 20 percent of MVNO initiatives succeed. MVNOs need to develop and execute a well-designed strategy which should focus on realistic market goals versus fashion goals; financial objectives; market segmentation; tailored offers for each specific segment, and robust architecture and implementation plans.

If MVNOs can differentiate themselves, create a unique proposition, excel in a valuable service support system for their customers, and educate customers about the benefits when compared to the offering of a traditional mobile service providers, they have an opportunity to thrive in this market. In fact, they have the potential to change the structure, economy and philosophy of the wireless industry.

Proper business planning, technological industry knowledge and superb execution capabilities are the key ingredients for high customer satisfaction and a successful MVNO launch, growth, success and business profitability.

Excelacom has experience and expertise in successfully launching wireless carrier MVNO businesses. With the MVNO market emerging in LATAM, Excelacom's extensive MVNO experience and unique solutions can help the operators in this region to minimize their risk and quickly launch a complete wireless business to market from concept to delivery. Please email us at for more information.

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