Why the future of MVNOs in Africa unpredictable
Mobile Virtual Operator Network was not a common term before the birth of Equittel, infact a good number of people still can’t tell the difference between an MVNOs and telecoms. The other day I was listening to mama mboga inform her friends about the new telco in town and basically to her Equity just opened a Safaricom.
The presence of SIM cards and mobile money platforms pretty much makes MVNOs pass for telcos in many people’s eyes. First off get the difference;
Difference between MVNO and MVNE
A MVNO (Mobile Virtual Network Operator) piggybacks on an existing Mobile Network Operator (MNO) frequency licensee to provide almost the same bouquet of services, or even a larger bouquet as circumstances allow.
A number of ‘MVNO-type’ business models are available for provisioning of mobile services where no operation of a physical network is provided:
|Service Provider (SP)||Provides basic voice/data services with very little customizability|
|Enhanced Service Provider (ESP)||Provides basic voice/data services some customizability|
|Mobile Virtual Network Operator (MVNO)||Provides basic voice/data services greater customizability|
|Mobile Virtual Network Enabler (MVNE)||Provides basic voice/data services on behalf of other brands|
If the message is not home yet, the MVNO is a reseller of mobile products and services from an actual and well established operator but under a different brand. This means that the operator networks depend on the existing telecommunication companies and therefore doesn’t have to invest in infrastructure.
MVNOs handle SIM card, branding, marketing, billing and customer care operations.
The Future of MVNOs
The first commercially successful MVNO in the UK was Virgin Mobile UK, launched in the United Kingdom in 1999 and now has over 4 million customers in the UK. Africa however took time before joining the market and launched the first Virtual Network Operator in 2006 by still by Virgin Group and Cell C network in South Africa.
Various countries in Africa have however opened up to MVNOs over time and some have been successful so far amid immense opposition. South Africa taking the lead, other countries with established MVNOs include; Morocco, Madagascar, Senegal and Cameroon. With the recent launch of up to four virtual operators in Kenya, we definitely join the list being the first in East Africa.
The future of these Mobile Virtual Operator Networks in Africa is however unpredictable considering the big fight between established telecoms and the upcoming operators.
Challenges that could kill MVNOs
- Low Average Revenue Per User—- this is considered a significant barrier to MVNOs in the African continent.
- Regulatory issues——stringent regulations are also perceived to be holding back the emergence of MVNOs
- Resistance by MVOs—-the industry pioneers apply strategic priorities in fear of competition from the upcoming operators
- High interconnect rates—–this can prevent MVNOs from offering competitive off-net calling especially since call volumes are unpredictable.
In a case where MVNOs press through the market, opportunities also lie in this same markets and would work well with the operators.
Lingering Opportunies for MVNOs
- Lack of competition —– the establishment of MVNOs is a growing industry and even if major telcos try to suffocate their existence, the likes of the operators are countable in Africa which is why this is a great opportunity currently.
- Big Brands —— MVNOs should target big brands while setting up. This way, the services offered to the consumers are bulky at an affordable price for the Virtual Networks.
- Smartphones and Data—– with the rise of Data use and smartphones in the African scene, MVNOs could easily thrive since the reach is bigger and better.
- Technology platform play M2M—-technologies that allow both wireless and wired systems to communicate with other devices of the same type. M2M is a broad term as it does not pinpoint specific wireless or wired networking, information and communications technology.
As it is, MVNOs don’t have a stable stand. All the same, the success of these operators is still at reach. Creators of MVNOs will however be required to understand the state, current and future trends as well as the likely revolution of the market.