MVNO Business

Business Plan

Agenda
MVNO fundamentals
About MVNO
Wireless service delivery chain
MVNO Business models
Why MVNO
Indian market analysis
PEST
Porter five forces
Analyzing MVNO opportunity in India
Our MVNO business model
Our business strategy
MVNO opportunity framework
MVNO marketing strategy targeting, positioning
MVNO strategy implementation price, product, place
and promotion
Financial analysis
MVNO business risks

MVNO
FUNDAMENTALS

About MVNO
A MVNO is a type of mobile operator which offers
voice and data services without owning any part
of the network infrastructure.
MVNO typically "rent" both the access network
and the transport network - the mobile spectrum,
from traditional mobile network operators and
provide services under their own brand name.

Wireless service delivery

chain

user

MVNO Business models

MVNO

MNO

MNO

MVNE

MNO

MVNO

MVNO

MVNE
MNO

BRANDS

Why MVNO

Why MVNO

INDIAN MARKET
ANALYSIS

PEST

Porters 5 forces
Buyer Power: High
Buyers demanding greater
variety at lower prices.

Competitive Rivalry: High

Margins are small around 4%
High competition is driving
down voice ARPU
.
Threat of substitution: Low
No strong demand for fixed line
Little awareness about VOIP
applications

Threat from New Entrants:

High
Growing subscribers base
Presence of infrastructure
Numerous foreign players are
interested to enter. Increase in
FDI will allow foreign players

Supplier Power: Moderate

Handset suppliers have strong
brands e.g. Nokia, Samsung,
LG
Large MVNO are able to push
cheaper brands

ANALYZING MVNO
OPPORTUNITY IN
INDIA

Our MVNO business model

MVNO

MNO

MNO

MVNE

MNO

MVNO

MVNO

MVNE
MNO

BRANDS

MVNO Business Strategy

Low CAPEX and OPEX for first few years.
Low fixed expense and high variable expenses.
Align with MVNE for infrastructure needs.
Buy cheap handsets from supplier such as Olive.
Sell handset at slightly higher price to cover
acquisition cost.
Prevent cannibalization of MNO customers.

MVNO opportunity
framework

MVNO Marketing Strategytargeting

TARGET
SEGMENT

MVNO OFFER

Retailer MVNO

Low income and credit

Simple prepaid
Focus on voice and SMS

Cable MVNO

Mass market (cable

households)

Quadruple play bundle

Focus on convergent offer

3G centric MVNO

Heavy users of mobile

data

Voice and data bundles

Focus on premium content
(music, gaming, sports, etc)

Music centric MVNO

Music fans

Voice and data bundles

Focus on competitive music
OTA downloads

Enterprise focussed
MVNO

Medium to large
enterprise

Corporate packages
Focus on enterprise
applications

Demographic
focussed MVNO

Focussing on unique
needs of demographic

Simple flat rate

Simple pricing plans

MVNO Marketing Strategy

TARGET CUSTOMER
Urban youth: Distinct mobile needs
More and longer out-bound voice calls
Big calling circles for both making and receiving calls
Large users of SMS
Both the earliest adopters and highest users of
value-added services
Higher usage for both voice and SMS at weekends
High demand for upgrades
Price sensitive

MVNO Marketing Strategy positioning

VALUE
ADDITIONS
NO FRILLS

LOW

HIGH
PRICE

MVNO Marketing Strategy

POSITIONING
VALUE ADDITIONS

Free in-network calling (CUG)

Personalized customer care

QWERTY handset at low prices .

NO FRILLS

Low prices & basic services

Simple rate plans.

Easy to understand

MVNO Strategy
Implementation

FLAT PRICING - 8.9$ (per month)

Prepai
dVoice

Prepai
dData

First 300 mins in

network outgoing
free.
Free incoming
After 300 mins
call charges 0.025
$/min.
Out of network
call charge 0.04$
One month
validity
Free data plan
up to 100 MB
After 100Mb
0.06$/Mb

Postpai
d Voice

Postpai
d Data

First 300 mins in

network outgoing
free.
Free incoming
After 300 mins
call charges
0.018 $/min.
Out of network
call charge
0.04$
Free data plan
up to 100 MB
After 100Mb
0.05$/Mb

MVNO Marketing Strategy

PRODUCT
Vodafone Campus Pack Talk and SMS @ 0.002$
Buy the Vodafone Campus Pack worth $2.2 with 2 years validity

Calls to 5 local Vodafone numbers @ 0.002$ / min

Local SMS @ 0.002$

Calls to local Vodafone mobile phones @ 0.01$ / min

Calls to other local mobile phones @ 0.02$ / min

STD calls @ 0.03$ / min

Existing Campus Pack subscribers can also opt for the new
tariff by doing a recharge of $1

MVNO Marketing Strategy

PRODUCT
Data plan includes

Internet for emails, surfing

Chatting applications within network (CUG).

SMS

Campus applications Calendar application for class and

event schedules, announcements

MVNO Strategy
Implementation
PLACE
Initially the service is rolled out in two Indian
metros
Delhi Mobile customer base 12 millions
Mumbai Mobile customer base 13 millions
The channels we are going to use for distribution
will be:
Retail stores (Big Bazaar)
Small shops
Bank ATM
Self service through SMS recharging

MVNO Strategy
Implementation
PROMOTION
Promotion at places where youth shop such as
Shopping malls
Movies theater
School campuses
Imaginative, eye-catching advertising & PR

MVNO Financial analysis

ARPU analysis
Postpaid Voice
Average call rate/min (within 300 mins) =
0.013$
Average call rate/min (after 300 mins) = 0.018$
Assuming that 90% customers stay within 300
mins and 10% customers talk more than 300
mins
Average call rate/min =
0.9*0.013+0.1*0.018=0.0135$

MVNO Financial analysis

ARPU analysis
Postpaid Data
Average rate/Mb (within 100 Mb) = 0.033$
Average rate/Mb (after 100 Mb) = 0.05$
Assuming that 95% customers stay within
100Mb limit and 5% customers exceed more
than 100 Mb limit
Average $/Mb =
0.95*0.033+0.05*0.05=0.03385$

MVNO Financial analysis

ARPU analysis
Prepaid Voice
Average call rate/min (within 300 mins) =
0.013$
Average call rate/min (after 300 mins) = 0.025$
Assuming that 90% customers stay within 300
mins and 10% customers talk more than 300
mins
Average revenue/min =
0.9*0.013+0.1*0.025=0.0142$

MVNO Financial analysis

ARPU analysis
Prepaid Data
Average rate/Mb (within 100 Mb) = 0.033$
Average rate/Mb (after 100 Mb) = 0.06$
Assuming that 95% customers stay within
100Mb limit and 5% customers exceed more
than 100 Mb limit
Average $/Mb =
0.95*0.033+0.05*0.06=0.03435$

MVNO Financial analysis

ARPU analysis (per month)

VOICE

DATA

(Per min)

(per Mb)

POSTPAID

0.0135$

0.03385$

PREPAID

0.0142$

0.03435$

Assuming 75% postpaid customers and 25% prepaid

customers
ARPU = 0.75*(0.0135*300+0.03385*100) +
0.25*(0.0142*300+0.03435*100)
=7.5$ => 90$ (per year)

MVNO Financial analysis

Other analysis (Click link)

Micros oft Excel

Works heet

MVNO Financial analysis

Lifetime value

M
LTV
AC
1 r i
- AC Acquisition cost 11.0$
- r Average retention rate 93%
- i Interest rate 8%
- M Margin customer generates in year 26.7$
- LTV = 167$

MVNO Business Risks

OPERATIONAL RISKS
Wholesale capacity pricing policy
Concern about subscriber data

REGULATORY RISKS
Foreign direct investment in MVNO
Limits on MNO investing in MVNO
Tax structure on profits

MVNO Business Risks

OTHER BUSINESS RISKS
Mobile number portability
Higher churn rate -> Higher customer acquisition
costs.
Negotiation with education institutions to offer
VAS.

MVNO Business
Opportunities
Future business opportunities
Fully functional MVNO in 5-10 years.
Provide differentiated mobile value added services
(m-VAS)
Future business opportunities Enterprise MVNO

THANK YOU
QUESTIONS?