MVNO 2.0
Warsaw 11th
September 2013
2
Agenda
 Introduction to Smarter Mobile UK Limited
 MVNO 2.0?
 Revisit the “no frills” concept
3
SMUK is a turnkey service provider of infrastructure and services to the
MVNO telecommunications industry globally.
 Li...
4
Smarter Mobile formed in 2009 by a group of experienced Mobile
Executives who have worked with major Telco’s around the ...
5
SMUK Highlights
6
Industry knowledge
involved with MVNO deals on multiple levels in many countries:
7
We all know that Growth in
MVNO’s is well established
8
And continues to grow
9
And are a significant segment
of the Mobile marketplace
10
But we need to drive up MVNO
Valuation
11
How?
12
MNO cost base
The cost structure of an MNO is biased heavily
towards fixed costs. The main fixed cost elements
of the M...
13
MNO cost base
The cost structure of an MNO is biased heavily
towards fixed costs. The main fixed cost elements
of the M...
14
MNO cost base
The cost structure of an MNO is biased heavily
towards fixed costs. The main fixed cost elements
of the M...
15
 Introduction to Smarter Mobile UK Limited
 MVNO 2.0?
 Revisit the “no frills” concept
MVNO 2.0?
16
The second generation of MVNOs
and mobile services ( 2.0)
MVNOs have established themselves firmly as the second group ...
17
A direct comparison of MVNO 1.0 vs. MVNO 2.0 business models
and strategies makes the differences between the first and...
18
Although low-frills MVNOs are responsible for the massive fall in mobile
communication prices over recent years, they a...
19
The Low Cost Airline model
 Introduction to Smarter Mobile UK Limited
 MVNO 2.0?
 Revisit the “no frills” concept
20
What can Budget Airlines teach
us?
21
What can Budget Airlines teach
us?
22
What can Budget Airlines teach
us?
23
What can Budget Airlines teach
us?
The vast majority of MNVO’s
have cut out the traditional
“middle man” adopted online...
24
What can Budget Airlines teach
us?
25
What can Budget Airlines teach
us?
MNVO’s have adopted
paperless strategies with
automated sign up processes
26
What can Budget Airlines teach
us?
27
What can Budget Airlines teach
us?
By removing full service
customer care ( Call centres)
from their processes and
intr...
28
What can Budget Airlines teach
us?
29
What can Budget Airlines teach
us?
MNVO’s are still dependant
upon the Host MNO network and
often suffer from the effec...
30
What can Budget Airlines teach
us?
31
What can Budget Airlines teach
us?
By focussing upon specific
deliverables MVNO can often
outperform the Host MNO’s
32
What can Budget Airlines teach
us?
33
What can Budget Airlines teach
us?
A weakness area, MNVOs do
not often exploit the cross selling
opportunities of the s...
34
What can Budget Airlines teach
us?
35
What can Budget Airlines teach
us?
Multiple Host MVNO’s still in their
infancy, a lot of commercial and
technical barri...
36
What can Budget Airlines teach
us?
37
What can Budget Airlines teach
us?
Early days but there is a growing
awareness of the need to control
your own customer...
38
What can Budget Airlines teach
us?
39
What can Budget Airlines teach
us?
growing awareness by the Host
MNO’s of the value of the MVNO
as sales channels and t...
40
What can Budget Airlines teach
us?
41
What can Budget Airlines teach
us?
There is still areas beyond just ( ever) lower prices that MVNO
can exploit
42
DIGITAL INNOVATION
EXAMPLE
HANDSETs – the Taboo subject!
43
By utilising a ready made program to be made available as a
“white label” offering that will enable MVNO’s to offer the...
44
How does it work? –
Program can be initiated by the
MVNO by newsletter promoting the
new service driving subscribers to...
45
Handset Recycling program
being launched with Family
Mobile Program will be initiated by newsletter
promoting the new s...
46
Simple Process flow
By using the existing
“Family Mobile” home
page it enables Family
Mobile to launch the
service imme...
47
recycle
Using “back end” processes
Here is the price we will give you for your old phone, check the details and if
you ...
48
recycle
When your envelope arrives, just pop your handset in the
preaddressed and paid envelope and return it to us. Up...
49
The subscibers account is
credited with the “Retail” sales
amount When sales process complete and credit added to the s...
50
MVNO subscribers = 75,000
percentage with old handsets = 50% 37,500
percentage that take up Recycle offer = 10% 3,750
A...
51
What can Budget Airlines teach
us?
52
•That a fast moving consumer market needs a fast response time;
• Customers don’t work on a 18 month time line, they wa...
53
Understand your Airtime
economics
54
Remove the complexity
Improving margins
Reducing operating costs
Reducing churn
Increasing ARPU
Earning customer loyalty
5555
MVNO’s are technically complex
…and can be very expensive to set up
5656
We have gone a long way to remove that
Complexity … and start up cost…
 Already negotiated with Network
Operators on...
57
We understand the need to keep things simple….
Working with IKEA, one the worlds most well known
Brands, we developed a...
58
The proposition
 Family mobile was created
to offer a low cost
affordable Mobile Phone
service to IKEA Family Card
hol...
59
That aligns with the Brand
…..and keeps it simple! - WYSIWYG
…as well as reducing costly customer care issues
60
Focusing on niche market segments, MVNO’s are challenged to design
new products and efficient delivery process. This me...
61
OSS/BSS is your key player in this strategy in providing a simple, easy and
natural user experience with your newly cre...
62
MNO cost base
The cost structure of an MNO is biased heavily
towards fixed costs. The main fixed cost elements
of the M...
63
Questions?
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  • The above chart outlines the complexity associated with developing and launching an MVNO.
  • Mvno warsaw sept 2013

    1. 1. MVNO 2.0 Warsaw 11th September 2013
    2. 2. 2 Agenda  Introduction to Smarter Mobile UK Limited  MVNO 2.0?  Revisit the “no frills” concept
    3. 3. 3 SMUK is a turnkey service provider of infrastructure and services to the MVNO telecommunications industry globally.  License Acquisition/Bid Support and Launch Consulting, Interim Management,  Sales and “Go to Market” strategy  Radio Spectrum, numbering, interconnect and licence negotiations  Managed procurement services including RFI/RFP preparation and full tender/bid services to support vendor selection  Comprehensive network planning including access, core and IT and ccomplete Management of deployment activities including acquisition, construction and installation services  Financial Operations, Due Diligence . Introduction to SMUK
    4. 4. 4 Smarter Mobile formed in 2009 by a group of experienced Mobile Executives who have worked with major Telco’s around the world Background
    5. 5. 5 SMUK Highlights
    6. 6. 6 Industry knowledge involved with MVNO deals on multiple levels in many countries:
    7. 7. 7 We all know that Growth in MVNO’s is well established
    8. 8. 8 And continues to grow
    9. 9. 9 And are a significant segment of the Mobile marketplace
    10. 10. 10 But we need to drive up MVNO Valuation
    11. 11. 11 How?
    12. 12. 12 MNO cost base The cost structure of an MNO is biased heavily towards fixed costs. The main fixed cost elements of the MNO are: •Network operations and maintenance (typically 30% of all fixed costs) •Sales (20%) •Customer service and billing (15%) •Marketing and communications (10-15%) The main variable cost elements for the MNO are: •Interconnect costs •Customer acquisition •Customer retention costs Rule number 1 - Understand your Host MNO’s business model
    13. 13. 13 MNO cost base The cost structure of an MNO is biased heavily towards fixed costs. The main fixed cost elements of the MNO are: •Network operations and maintenance (typically 30% of all fixed costs) •Sales (20%) •Customer service and billing (15%) •Marketing and communications (10-15%) The main variable cost elements for the MNO are: •Interconnect costs •Customer acquisition •Customer retention costs MVNO cost base The cost structure of the typical MVNO is almost completely the opposite of a facilities based network operator. The main fixed cost elements are relatively small and comprise: •Customer care and billing •Sales, marketing and communications The variable cost proportions are dominated by wholesale airtime costs as well as customer acquisition. Wholesale costs can often represent 50% to 60% of a typical MVNO’s operating costs which immediately limits profit margins. It is therefore essential for the MVNO to develop a business model that minimises the cost of customer acquisition and retention as well as fixed costs in order for the business model to be commercially viable. Rule number 2 - Understand your business model
    14. 14. 14 MNO cost base The cost structure of an MNO is biased heavily towards fixed costs. The main fixed cost elements of the MNO are: •Network operations and maintenance (typically 30% of all fixed costs) •Sales (20%) •Customer service and billing (15%) •Marketing and communications (10-15%) The main variable cost elements for the MNO are: •Interconnect costs •Customer acquisition •Customer retention costs MVNO cost base The cost structure of the typical MVNO is almost completely the opposite of a facilities based network operator. The main fixed cost elements are relatively small and comprise: •Customer care and billing •Sales, marketing and communications The variable cost proportions are dominated by wholesale airtime costs as well as customer acquisition. Wholesale costs can often represent 50% to 60% of a typical MVNO’s operating costs which immediately limits profit margins. It is therefore essential for the MVNO to develop a business model that minimises the cost of customer acquisition and retention as well as fixed costs in order for the business model to be commercially viable. Remember for a MVNO nothing is for FREE! It is a “margin” business Remember for a MVNO nothing is for FREE! It is a “margin” business Rule number 3
    15. 15. 15  Introduction to Smarter Mobile UK Limited  MVNO 2.0?  Revisit the “no frills” concept MVNO 2.0?
    16. 16. 16 The second generation of MVNOs and mobile services ( 2.0) MVNOs have established themselves firmly as the second group of mobile service providers, with more than 250 in business worldwide. Whereas the first generation of MVNOs (1.0) followed a strategy of cost leadership, the second generation (2.0) are concentrating on differentiation to address high ARPU market segments. The first generation MVNOs implemented their strategies using lean business structures and processes and the Internet as a cheap direct sales channel. Pre-paid products dominated and the providers limited their mobile services mainly to voice and messaging. The model for this was the success of the budget airlines concept – and has led to the term ’Low-Frills MVNOs’.
    17. 17. 17 A direct comparison of MVNO 1.0 vs. MVNO 2.0 business models and strategies makes the differences between the first and second generation MVNOs clear in that second generation MVNOs have chosen a differentiation strategy, whereby the providers don’t limit themselves to the three competitive parameters; brand, price and distribution channels but with customer loyalty programs, customized communication concepts (above & below the line), and even concept stores The differentiation of the user experience ensures that these MVNOs will have a sustainable competitive advantage over the MNOs, who are generally perceived by end consumers as being mass market service resulting from a market approach of “One Size fits all" to a vertical, segment-specific service offering. The second generation of MVNOs and mobile services ( 2.0)
    18. 18. 18 Although low-frills MVNOs are responsible for the massive fall in mobile communication prices over recent years, they also take on a job which the MNOs don’t or can’t fulfil: they provide mobile services to the lower end of the market – profitably. The market potential for low frill MVNOs is also believed to be limited as the majority of the customers see the handset subsidies as a major criterion for their purchase decision however it is worth revisiting the original “no frills” business concept. That is : The evolution of budget airlines The second generation of MVNOs and mobile services ( 2.0)
    19. 19. 19 The Low Cost Airline model  Introduction to Smarter Mobile UK Limited  MVNO 2.0?  Revisit the “no frills” concept
    20. 20. 20 What can Budget Airlines teach us?
    21. 21. 21 What can Budget Airlines teach us?
    22. 22. 22 What can Budget Airlines teach us?
    23. 23. 23 What can Budget Airlines teach us? The vast majority of MNVO’s have cut out the traditional “middle man” adopted online strategies or leveraged existing sales channels such as supermarkets etc
    24. 24. 24 What can Budget Airlines teach us?
    25. 25. 25 What can Budget Airlines teach us? MNVO’s have adopted paperless strategies with automated sign up processes
    26. 26. 26 What can Budget Airlines teach us?
    27. 27. 27 What can Budget Airlines teach us? By removing full service customer care ( Call centres) from their processes and introduced “self care” it has removed the opportunity for complaints
    28. 28. 28 What can Budget Airlines teach us?
    29. 29. 29 What can Budget Airlines teach us? MNVO’s are still dependant upon the Host MNO network and often suffer from the effects of failures of the network beyond their control
    30. 30. 30 What can Budget Airlines teach us?
    31. 31. 31 What can Budget Airlines teach us? By focussing upon specific deliverables MVNO can often outperform the Host MNO’s
    32. 32. 32 What can Budget Airlines teach us?
    33. 33. 33 What can Budget Airlines teach us? A weakness area, MNVOs do not often exploit the cross selling opportunities of the subscriber base they have ( at great cost) acquired
    34. 34. 34 What can Budget Airlines teach us?
    35. 35. 35 What can Budget Airlines teach us? Multiple Host MVNO’s still in their infancy, a lot of commercial and technical barriers to over come
    36. 36. 36 What can Budget Airlines teach us?
    37. 37. 37 What can Budget Airlines teach us? Early days but there is a growing awareness of the need to control your own customers to break the dependency ( monopoly?) upon a single Host MNO and obtain the freedom to move your wholesale business to a different provider
    38. 38. 38 What can Budget Airlines teach us?
    39. 39. 39 What can Budget Airlines teach us? growing awareness by the Host MNO’s of the value of the MVNO as sales channels and the willingness to provide support in the form of “Marketing Support” etc
    40. 40. 40 What can Budget Airlines teach us?
    41. 41. 41 What can Budget Airlines teach us? There is still areas beyond just ( ever) lower prices that MVNO can exploit
    42. 42. 42 DIGITAL INNOVATION EXAMPLE HANDSETs – the Taboo subject!
    43. 43. 43 By utilising a ready made program to be made available as a “white label” offering that will enable MVNO’s to offer their existing users an easy method of converting old unwanted handsets into “calling credit”. This program will not only generate additional gross margins for the MVNO but also has very emotive PR opportunities by demonstrating that they have a program that will: How does a handset recycling program assist an MVNO? Help to reduce the number of mobile phones that end up in landfill. Help provide affordable mobile phones to less well off people in developing countries Demonstrate old phones are being properly and efficiently recycled in line with current legislation.
    44. 44. 44 How does it work? – Program can be initiated by the MVNO by newsletter promoting the new service driving subscribers to the website or Subscribers find it by normal browsing the site “White label” functionality Subscribers returned to MVNO website
    45. 45. 45 Handset Recycling program being launched with Family Mobile Program will be initiated by newsletter promoting the new service driving subscribers to the website or Subs find it by normal browsing the site
    46. 46. 46 Simple Process flow By using the existing “Family Mobile” home page it enables Family Mobile to launch the service immediately and get to market in weeks Family Mobile have created a dedicated page to explain how the process works
    47. 47. 47 recycle Using “back end” processes Here is the price we will give you for your old phone, check the details and if you want to proceed tick the boxes and click on “recycle”
    48. 48. 48 recycle When your envelope arrives, just pop your handset in the preaddressed and paid envelope and return it to us. Upon receipt and checking we will credit your mobile account with value of your recycled phone . That’s it! Once processes are completed
    49. 49. 49 The subscibers account is credited with the “Retail” sales amount When sales process complete and credit added to the subscriber account it will show up in the subs balance etc.
    50. 50. 50 MVNO subscribers = 75,000 percentage with old handsets = 50% 37,500 percentage that take up Recycle offer = 10% 3,750 Average value of handset = £25 Credit applied to Subscriber SIM card account = £25 "wholesale" cost to MVNO of Airtime calculated at average 55% £13.75 Gross margin to MVNO per transaction = £11.25 number of sales per annum = 3,750 £42,188 How does this translate into a business case for a MVNO? As a MVNO works on a “wholesale” rate from the Host MNO there is the opportunity to generate “gross margin” from the handset sale if converted to “calling credit” as demonstrated below:
    51. 51. 51 What can Budget Airlines teach us?
    52. 52. 52 •That a fast moving consumer market needs a fast response time; • Customers don’t work on a 18 month time line, they want it now! •Do what needed now or someone else with do it first! •Idea on Monday , promotion on Friday Differentiate customers by value
    53. 53. 53 Understand your Airtime economics
    54. 54. 54 Remove the complexity Improving margins Reducing operating costs Reducing churn Increasing ARPU Earning customer loyalty
    55. 55. 5555 MVNO’s are technically complex …and can be very expensive to set up
    56. 56. 5656 We have gone a long way to remove that Complexity … and start up cost…  Already negotiated with Network Operators on your behalf  We already have a fully staffed and experienced Customer Call Centres – in the UK and the USA  We’ve already created a billing platform and connected it to the Network operators  We can produce your Branded SIM packs in weeks  We provide a range of Simple and straightforward tariff plans  We have a generous Revenue Sharing plan for you …and can provide a full “Turn Key” service X
    57. 57. 57 We understand the need to keep things simple…. Working with IKEA, one the worlds most well known Brands, we developed a mobile service that reflected their not only their Brand but their approach to their customers, one of keeping things simple and straight forward. We have used that experience in creating our MVNO product with the keynote of Simplicity and speed to market
    58. 58. 58 The proposition  Family mobile was created to offer a low cost affordable Mobile Phone service to IKEA Family Card holders  Primarily SIM only offering with the tariff plan kept as low as possible  Majoring on the benefits of “shared” minutes via a Family Budget offering  Ease of use automatic top up  Integrated into back end loyalty programme  Giving IKEA direct marketing opportunity to its subscribers and creating brand loyalty …using a “self care” approach
    59. 59. 59 That aligns with the Brand …..and keeps it simple! - WYSIWYG …as well as reducing costly customer care issues
    60. 60. 60 Focusing on niche market segments, MVNO’s are challenged to design new products and efficient delivery process. This means you need integrated systems and services to rollout the business to the end customer. It may seem less painful to invent an original service, but it is often harder to configure the best solution. Expanding and developing your offering requires careful alignment with your overall business strategy. Entering the MVNO market can be a huge risk without a cautious planning of the required tools. It is does not get any easier if you are a new MVNO, already running a MVNO, or your MNO is planning to develop one. A MVNO business is only as good as its ability to create innovative marketing … it still means you need to plan ahead
    61. 61. 61 OSS/BSS is your key player in this strategy in providing a simple, easy and natural user experience with your newly created product/service packages. By integrating the business process flow with your BSS environment, the MVNO processes need to be completely optimized for managing the critical customers' information and providing the best customer service. No matter if you are established MVNO or a start-up, the present complex challenges can be easily managed with the right partner. An MVNO in today's fast moving market needs to look to a “Configure on- demand”, business model with the right combination of tools appropriate for successful execution of processes that will bring the right solution to generate a mass of loyal customers while reducing OPEX. Whatever the approach - flexible OSS/BSS and billing platforms are essential…
    62. 62. 62 MNO cost base The cost structure of an MNO is biased heavily towards fixed costs. The main fixed cost elements of the MNO are: •Network operations and maintenance (typically 30% of all fixed costs) •Sales (20%) •Customer service and billing (15%) •Marketing and communications (10-15%) The main variable cost elements for the MNO are: •Interconnect costs •Customer acquisition •Customer retention costs MVNO cost base The cost structure of the typical MVNO is almost completely the opposite of a facilities based network operator. The main fixed cost elements are relatively small and comprise: •Customer care and billing •Sales, marketing and communications The variable cost proportions are dominated by wholesale airtime costs as well as customer acquisition. Wholesale costs can often represent 50% to 60% of a typical MVNO’s operating costs which immediately limits profit margins. It is therefore essential for the MVNO to develop a business model that minimises the cost of customer acquisition and retention as well as fixed costs in order for the business model to be commercially viable. Remember for a MVNO nothing is for FREE! It is a “margin” business Remember for a MVNO nothing is for FREE! It is a “margin” business Rule number 3
    63. 63. 63 Questions?
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