This document discusses key considerations for mobile virtual network operators (MVNOs). It begins by outlining Smarter Mobile's history of providing coverage solutions, value-added services, and consultancy work. It then discusses its focus on the MVNO space. The document provides an overview of the MVNO business model, noting that MVNOs buy wholesale access and sell retail to generate margins. It also discusses MVNO and MNO cost structures, highlighting that MVNO costs are dominated by wholesale airtime and customer acquisition costs. The document emphasizes that MVNOs must minimize these variable costs and fixed costs to have a viable business model.

1. MVNO's World Congress
Paul Wade
CEO
Smarter Mobile
Rome – April 2013

2. 2
Introduction
Historically the Company derived revenue from three main streams:-
Coverage solutions and Private
GSM solutions.
Primarily for NHS Hospital Trusts
and Major Hotel and enterprise
clients using
Multi-Operator Distributed
Antenna Systems (DAS) as well as
Coverage solutions, including the
Design and brokering of multi
operator schemes etc.
Value Added Services
where Smarter Mobile provides both
“off the shelf” and bespoke Applications
for customers requiring specific Mobile
or Wireless Applications.
•Communication Kiosks
•Footfall Monitoring and
Tracking
•Mobile Applications
•Mobile Web
•Mobile Ticketing
•Mobile Content
Consultancy services
mainly focused around
•Radio Frequency Planning such
as the contract with Eaton Towers,
•MVNO support such as UMS
MVNE project in US/Canada
•Jawal MVNO Project in Israel
•as well as small ad hoc projects
for Ericsson, Thales, AMC.
Smarter Mobile is a Mobile Solutions provider of infrastructure and services to the wireless
telecommunications industry globally. Established in 2009, with the purpose of creating a simple
way of setting up mobile services with carefully selected partners.

3. 3
( holding co)( holding co)
Wholesale agreement
Wholesale agreement
( MVNE)
( MVNE) Wholesale agreement
Wholesale agreement
( MVNA)
( MVNO) ( MVNO)
Mi Gente
Mobile
We now focus on the MVNO space
MVNO
MVNO
MVNO
MVNO

4. 4
You buy wholesale and sell retail.
You make profits ( hopefully!) on the margin you generate.
You do not own the key asset for running a mobile business -
the Spectrum and connectivity….. your host MNO does.
Creating an adaptable business model to both
establish and expand your MVNO…
… remember market conditions change so be prepared to
adapt!
The basic facts of an MNVO business

5. 5
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
business model

6. 6
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

7. 7
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

8. 8
The MVNO model Appears quite simple
Improving margins
Reducing operating costs
Reducing churn
Increasing ARPU
Earning customer loyalty

9. 9 9
MVNO’s are in fact technically complex
…and can be very expensive to set up

10. 1010
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

11. 11
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

12. 12
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

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That aligns with the Brand
…..and keeps it simple! - WYSIWYG
…as well as reducing costly customer care issues

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A MVNO business is only as good as its ability to create
innovative marketing
… how????

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But what is innovation?
A MVNO business is only as good as its ability to create
innovative marketing

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But what is innovation?
A MVNO business is only as good as its ability to create
innovative marketing

17. 17
But what is innovation?
A MVNO business is only as good as its ability to create
innovative marketing
… where to apply it …everywhere?

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Now it gets complicated…
… too many choices?

19. 19
Ok lets make simple….
… but what are the impacts of each option?

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Where to apply innovation ….
… to get the best results

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Value creates revenue….

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Value creates revenue….
… more revenue … great!

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But creating Value requires infrastructure….

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But creating Value requires infrastructure….
… the techies will love the chance to play with new toys!

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OMG ! - infrastructure generates costs….

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OMG ! - infrastructure generates costs….
… how are we going to pay for it?

27. 27
Bottom line - Viability is balancing act….

28. 28
Bottom line - Viability is balancing act….
… but you do need invest for future profit

29. 29
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

30. 30
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…

31. 31
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…
… to deliver new products and to keep costs under control!

32. 32
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

33. 33
How did we do it?

34. 34
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.
To minimise resources and have
predictability of costs we chose
to “outsource” our OSS/BSS
requirements both in the UK
and USA
To minimise resources and have
predictability of costs we chose
to “outsource” our OSS/BSS
requirements both in the UK
and USA

35. 35
Back-office
Handset/logistic
Network / VAS
Back-office
CC & Billing
Call Center
Handsets & logistics
Customer Care
Campaign Mgmt.
Brands & Distribution
Voice & data
capacity
MVNO
Voice & data
capacity
MVNO
Voice & data
capacity
MVNO Expertise
CC & Billing
Call Center
Back-office
CC & Billing
Call Center
Handset/logistic
Customer Care
Campaigns
Private Label
MVNO’s
Operator Margin
We chose the “Multi Brand” platform

36. 36
Using the CDRator platform enabled Family Mobile
provide a complete self care online facility for
customers to manage their account
…….Reducing calls ( and cost) to the Call centre for support
=

37. 37
1. Business Case Assessment or Development
2. Pre-Integrated Sales, Provisioning, Account Processing, Taxation reporting, Customer Service
and Tech Support
3. Handset and Device supply and logistics
4. Pre-Integrated BSS/OSS to Sprint’s Network
5. Experienced Operational Team familiar with Sprint’s internal environment
Same model in the USA
Delivering a suite of business solutions to
meet your needs:
 MVNO - Hosted & Managed
 MVNO - Stand Alone
 Integrated Contact Center Services
 Stand Alone Contact Center Services
 Full Consultancy
Using the same platform UMS delivers a pre-integrated
set of business tools necessary for the successful launch and operation of
a MVNO in the USA including:
…….using same knowledge base

38. 38
Wholesale agreement
Wholesale agreement
( MVNE)
( MVNE)
Wholesale agreement
Wholesale agreement
( MVNA)
( MVNO) ( MVNO)
Mi Gente
Mobile
Minimising costs by “shared” resources…
MVNO
MVNO
MVNO
MVNO
…….across multiple environments and countries

39. 39
There is no magic to running a MVNO
Improving margins
Reducing operating costs
Reducing churn
Increasing ARPU
Earning customer loyalty
Just hard work and dedication –
like any other successful
business
Just hard work and dedication –
like any other successful
business

40. 40
But just to finish with…….

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A frequent mistake is to just look a the market from the end user
perspective - and think you can identify the cultural gaps to “localise” your
products
More often the real issue is the need to address your own internal mind-
set to understand how to do business in a new cultural environment
It goes beyond merely acknowledging cultural differences. It means you
need to adapt your behaviour to conform to new cultural contexts
without losing yourself in the process. Not only is this difficult, it’s a
frightening prospect for most people and something completely outside
their comfort zone.
No matter how good you think your product is, no matter how well it sells
in the UK, the United States or anywhere else, you need to really look at
that product in the context of the local needs and say is that the right
product, is it too high-priced, do we need to do something different,
The importance of adapting your business model to
acknowledge cultural differences
…….keep asking yourself.. do we need to adapt?

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"There is no such thing as the Chinese market," says Martin Roll, a
business and brand strategist who provides advisory to global and Asian
brands on China. "You have to look at China more like a mosaic of
cultures," he adds.
The need to understand different distribution channels
in Asia
There is no single consumer profile, and
analysts suggest companies remain
flexible and innovative, while
understanding how their company would
fit in each specific market.
"There's no simple answer in China -- it
depends so much upon the specific
market and upon the specific
characteristic of your own company," he
adds.
Actually, this holds good for any new market – no matter how well you think
you know a market, you need to surround yourself with local talent can help
you break deals, understand the culture and the complexities of the market as
well as compensate for the language barrier

43. 43
Thank you
paul.wade@smartermobile.com
+44(0) 7533904350