Cartesian Perspectives - What does the future hold for the MVNO market?

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In this thought study presentation Cartesian addresses the current and future trends, and likely evolution of the MVNO market from research and analysis conducted in late 2011.

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Cartesian Perspectives - What does the future hold for the MVNO market?

  1. 1. www.cartesian.com Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or means (electronic, mechanical, photocopy, recording or otherwise) without the permission of Cartesian. Cartesian Ltd. Registered in England and Wales. Registered Number: 03230513 Registered Office Address: Descartes House, 8 Gate Street, London WC2A 3HP United Kingdom Cartesian Perspectives What Does the Future Hold for the MVNO Market? January 2012
  2. 2. 2Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. Cartesian™ is a specialist provider of consulting services and managed solutions to the global communications, technology and digital media industries Company Overview • Offices in Boston, Kansas City, London, New York and Washington • Onsite and offsite delivery models to suit client needs; partner network of ICs, technology providers and SIs • Clients across six continents include communications service providers, technology vendors/OEMs, digital media, financial companies and regulators • Proven understanding of business strategy and client issues • Expert assessments of operations, platforms, and business processes to support corporate strategies • Аward-winning technology platform and 20+ years experience deploying solutions for CSPs • Industry specialists, focusing exclusively on communications, technology and digital media • Expert operational know-how and project management skills, with proven methodologies across content areas • Several hundred consultants, averaging 15 years of sector-specific experience Capabilities Global Reach Industry Focus 111101000110010110101101001000 011000101101000110011101001001 111001110110101010100110101000 010001010111101100010101001011 110010010110100010110100101010 010111010101010101001011101001 010110100101011010100101101001 110110101010010100101101001011 101001011010001011010010101001 011101010101010100101110100101 011010010101101010010110110100 010100101101001010110101001000
  3. 3. 3Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. Our clients are the global leaders in the communications, technology and digital media industries Example Clients Mobile • Fixed • Cable/MSO • Satellite • Cloud & Hosting Service Providers Consumer Electronics • Enterprise • Software & Apps Components • Infrastructure • Intermediaries • Integrators Technology Digital Media • Automotive • Energy • Hospitality Health • Insurance • Retail Media & Verticals Government • Regulators • Industry Groups • Foundations Influencers Private Equity & Venture • Funds • Commercial Lenders Investors
  4. 4. 4Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. We offer end-to-end professional services through strategy development, execution and a suite of managed solutions Service Portfolio Growth & Transformation Market & Competitive Assessment Go-to-Market Strategy Corporate Strategic Planning Deal Development and M&A Legal & Regulatory Support Program Management (PMO) Operational Excellence Product Design & Launch OSS/BSS Transformation Networks & Infrastructure Business Assurance, Risk, Compliance Ascertain® Platform Solutions • Sales & Marketing Optimization • Customer Lifecycle Management • Device Lifecycle Management • Assurance & Fraud • Network & Provisioning • Business Intelligence Managed Analytics Smart Building Solutions Business Process Outsourcing Strategy Execution Managed Solutions
  5. 5. 5Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. MVNO Expertise Cartesian has worked on 40+ MVNO projects throughout the US, Europe, the Middle East and Asia • Strategy and business case support including detailed cost and revenue modelling • Negotiation support for contracts and commercial terms • Vendor evaluation and selection, including architecture design • Securing funding • PMO and launch support (e.g. proposition development, distribution, platform deployment) MVNOs MNOs Regulators • Assessment of MVNO policy, regulation and market impact • International regulatory benchmarking and support with preparation of NRA’s regulatory licensing framework • Preparing the MVNO business case, drivers and alternative operational and commercial models • Detailed cost and revenue modelling to calculate MVNO / wholesale commercial terms • MVNO and sub-branding strategy including scenario analysis • Cost modelling to determine wholesale pricing • Identification and recruitment of wholesale / MVNO partners • Development of optimal operational and technical architecture • Internal segmentation analysis • Vendor short-list, assessment and selection Confidential Retailers
  6. 6. 6Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. Context In Q4 2011, Cartesian conducted research and analysis to understand the state, current and future trends, and likely evolution of the MVNO market Interviews • Cartesian interviewed a number of key individuals within the MVNO space, including MVNOs, MNO wholesale teams, MVNEs and MVNAs Secondary Research • Cartesian conducted secondary web research to capture details on recent MVNO launches, failures and success stories Thought Leadership • Cartesian drew on its knowledge base and experience from over 40 MVNO projects • We hypothesised trends and validated with research Outputs • The research and analysis was conducted throughout Q4 2011 • Findings were presented at the MVNO Conference in Paris on November 22 • This presentation contains the results of our analysis, and focuses on 12 key trends in MVNO: 6 emerging opportunities, and 6 trends impacting the market Scope of Thought Study
  7. 7. 7Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. Key Questions Throughout this Thought Study, we address the following key questions: What is the state of the MVNO market today? What are the emerging MVNO opportunities? How are commercial and operational models evolving? What are the emerging MVNO opportunities? How are commercial and operational models evolving?
  8. 8. 8Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. New MVNOs MVNOs continue to roll out on a weekly basis… Nov 2011 US $19/month service mandating WiFi offload for calls and internet usage Oct 2011 Mexico Complementing Megacable’s existing triple play offering Oct 2011 Spain A low cost service launched by Spanish portal Movilonia and MVNO Ortel Mobile Oct 2011 Switzerland Targeting ethnic communities. Already operates in five other European countries Sep 2011 Austria Retailing via a network of tobacconists across the country Sep 2011 Australia Competitions to Red Bull events and two handsets with a dedicated Facebook button Sep 2011 Germany A service provided by an auction TV channel from Germany Nov 2011 Malaysia Targeting the youth sector, offering 365-day validity for top ups Oct 2011 UK Customers pay upfront for a 1, 3, 6 or 12 month contract Nov 11 Netherlands A low cost service launched by Dutch supermarket chain Dirk van den Broek
  9. 9. 9Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. Lack of demand Lack of funding Regulatory Lack of demand Brand Rationalisation Lack of demand Not as profitable as core business MVNO Failures …However, failures still occur for common reasons Source: Prepaid MVNO, Mobile News, Cartesian xx xx xx nutshell hablafacil xx xx Ethnic (youth British Asian market) Charity / donation 1st MVNO in market, prepaid Customers with poor credit ratings Immigrant Youth Quad-play Nov 2010 – Sep 2011 (11 months) Oct 2010 – Aug 2011 (11 months) May 2010 – Aug 2011 (16 months) Mar 2010 – May 2011 (15 months) Mar 2009 – Dec 2010 (22 months) May 2009 – Oct 2011 (30 months) Nov 2010 – Mar 2012 (17 months) Reasons For FailureCountry Description Duration
  10. 10. 10Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. MVNO Market Share Worldwide Market share and growth trends vary significantly by market Sources: Cartesian, Nereo, company websites, press releases South America <1% Hong Kong: • Total: 8% Japan • Total: 2% • JCI (largest MVNO) Australia: • Total: 4% • Virgin Mobile • Boost Mobile Oman: • Total: 9% • FRiENDi (6%) • Renna (3.%) USA: • Total: 7% • Tracfone (19.3m) Virgin recently acquired by Sprint (was second largest MVNO with ~2% market share) Europe (representative sample, not exhaustive): • Germany, 19% • Norway, 16% • Netherlands, 14% • UK, 13% • France, 10% • Denmark, 5% • Finland, 2.5% • Czech Republic, 0%
  11. 11. 11Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. Operator Focus on Mobile Wholesale Operators are placing an increasing emphasis on MVNO, driven in part by success stories “Sprint has more than 100 customers reselling its network capacity and plans to increase that number by at least 10 percent in the next year” “To expand the reselling business more rapidly, Sprint has started offering a broader array of services, such as billing, marketing support and competitive analysis” Matt Carter, President of Sprint Wholesale Solutions and New Ventures Wholesale Retail Share of Net Adds, Q3 2011 35% 65% UK Denmark US 2.5m 4% 0.7m 14% 19.3m 7% Country / MVNO Subs Market Share Malaysia 1.4m 4% Example Success Stories
  12. 12. 12Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. Trends Impacting MVNO We see 12 major trends impacting the MVNO industry Ensuring Success through Evolving Commercial and Operational ModelsEmerging MVNO Opportunities 7 2 3 4 6 5 Explosion of data and smartphone adoption Wi-Fi Offload Wholesale LTE M2M Internationalisation Roaming 1 Micro-segments enabled via MVNA 11 8 9 10 Diversification Beyond Low Cost MVNO vs. OTT Evolving commercial models Full MVNO Models 12 Data Intelligence MVNA MNO MVNO MVNO MVNO
  13. 13. 13Confidential and Proprietary — Copyright © 2014 Cartesian Ltd. All rights reserved. Descartes House 8 Gate Street London WC2A 3HP UK Two Financial Center 60 South Street, Suite 820 Boston, MA 02111 USA 8260 Greensboro Drive Suite A-30 McLean, VA 22102 USA 7300 College Blvd Suite 302 Overland Park, KS 66210 USA 400 Atrium Drive 1st Floor Somerset, NJ 08873 USA For a full free copy of this study, or to discuss potential areas of support, please contact us: Contact Information Mike Greening Vice President mike.greening@cartesian.com +44 (0) 7739 570829 www.cartesian.com

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