This document provides an overview and analysis of trends in the MVNO (mobile virtual network operator) market. It identifies 12 major trends, including the explosion of data and smartphone adoption enabling new opportunities for MVNOs to target micro-segments. Operator focus on mobile wholesale is growing as MNOs see it as profitable. MVNO commercial models are also evolving from solely low-cost offerings to include diversification beyond price.

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Cartesian Ltd. Registered in England and Wales. Registered Number: 03230513Registered 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

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Cartesian™is a specialist provider of consulting services and managed solutions to theglobalcommunications, technology and digital media industries
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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

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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 baseand 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

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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?

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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

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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
1stMVNO 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 Failure
Country
Description
Duration

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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%

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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

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Trends Impacting MVNO
We see 12 major trends impacting the MVNO industry
Ensuring Success through Evolving
Emerging MVNO Opportunities Commercial and Operational Models
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

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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