MVNOs are a big deal in the Service Provider market
We’re not just making meaningless empty statements. The global market for mobile virtual network operators (MVNOs) is set to reach a value of over $101 billion in 2025. They’re a fascinating concept rapidly growing in popularity across multiple sectors, particularly retail.
But what makes a good MVNO? What do prospective providers need to know if they’re looking to launch their own offering? It would be helpful to know…
Gamma’s Channel Director for Service Providers Adrian Williams sat down with James Gray, Managing Director of Graystone Strategy, to cover the key points behind MVNOs. Their in-depth conversation revealed the market dynamics behind MVNOs, and why working alongside a reputable provider can make all the difference.
Let’s start with the acronyms
“I don’t think we can expect everyone to know the difference between the different acronyms.”
Adrian isn’t putting anyone down, don’t worry about that. It’s a common trend in telecommunications for acronyms to be thrown at you from all directions. SASE, PSTN, VoIP – just a few we can pull from the top of our head.
Allow James to provide a quick overview on the acronyms that you all need to know. These are:
- MVNOs: James summarises these as mobile providers who don’t own the network infrastructure. Think Tesco Mobile; they sell the services and own the customer relationship, while O2 props up everything behind.
- Mobile virtual network enablers (MVNEs): “Typically a technology company” providing the billing layer, CRM, or any other necessary tool. James mentions that they’re not the ones selling the wholesale element to end customers.
- Mobile virtual network aggregators (MVNAs): Often the ones who provide the technology but also resell to customers. James describes them like “a bit of a multi plug”. One lead is plugged into the network, and multiple others plugged into MVNOs.
That’s all well and good, but James admits some things are still “ill defined”, which confuses matters. MVNEs are MVNAs, MVNOs are MVNEs; it all looks quite messy. But what’s worth remembering is that some people handle the technology, some sell wholesale, and there are customers using a mobile network at the end of it.
All clear? Good.
Trends and dynamics
MVNO is most certainly a growing market, in both the UK and Europe. On the continent, that specific market is set to grow from $35 billion of revenue to $65 billion in 2030. So why is it growing?
We seem to have hit a saturation point where everyone has a mobile phone. That’s why growth is derived from other factors, such as how people feel “more comfortable” buying from a brand that isn’t a standard communications brand. The market is beginning to shift away from those traditional carriers.
Everyone will have their “favourite” carrier (don’t be ashamed to admit it) and are happy to take services from them. Then MVNOs came along, and suddenly we could choose to opt for brands that “[brought] their own unique focus.” Tesco Mobile are the “example that everyone understands” – for James, they “almost legitimised MVNO.”
MVNOs also offer a better digital experience, which appeals to the younger, tech savvy demographic. They go online, compare the best deals, and find the right brand that offers the right service. There’s a good reason why MVNOs represent 18% of all UK retail connections.
Consumer attitudes are changing – all they want to know is “does that service work for me?”, regardless of where it comes from. MVNOs can offer subscription-based models commonly seen in Netflix or Spotify, which resonates with those younger generations, rather than traditional prepaid ones.
Technology is changing too. James, while working as Head of Wholesale Marketing at Vodafone in 2006, saw just how expensive launching an MVNO was. Capital expenditure, time and effort were all needed to get such a product off the ground.
Now, the cloud, eSIM and the Internet of Things (IoT) have changed the MVNO game. There are more enablers to help reduce the risk, and more businesses feel inclined to enter the market. Banking and financial specialists Revolut, for example, integrated a travel eSIM for VIP customers that “appears to have been very, very successful for them.”
Those kind of success stories will encourage businesses to not just look at an MVNO as just additional margin. There can be “a more blended approach… by incentivising the mobile.”
What makes a good MVNO?
It’s a good question from Adrian. For any brand eyeing their own MVNO proposition, they need to know the “key ingredients” on how to be successful. That kind of knowledge is extremely helpful when preparing to embark on such a venture.
First, there’s customer access. MVNOs, as James rightly says, are “marketing businesses” that need to adopt new ways to interact with customers. Those methods can include content, distribution, or through those “unique and existing relationships.”
It certainly worked wonders for Revolut; despite having no physical branches, they had the customer access needed to sell additional offerings.
Next is the “differentiated proposition.” These brands have to offer something different, and a “me too” mindset won’t get anyone very far. Back in the day, slashing prices may have caught an eye or two, but nowadays that doesn’t cut it for a business looking to grow.
For startups and smaller organisations, they shouldn’t be put off about entering a market like this. It should never just be a “flight of fancy”; rather, a strategic decision with certainty that “it works within your business.” Only then can technology and the “plumbing” be addressed.
Technology must be deployed in a way that “delivers the proposition” aimed at customers. That foundation is what the “plumbing”, or wholesale access, can be built off that delivers the proposition to customers. That way, these MVNOs can compete in a competitive market and “still make a margin.”
In 2024, 62% of CEOs highlighted growth as their top business priority, compared to 49% in 2023. Profit and making a margin will always be a priority for senior leaders, meaning that any new proposed project must achieve growth. While the barriers to entry in the MVNO market are lower than before, having that senior buy-in can drive strategic goals and take that MVNO proposition further.
Verticalisation and centralisation
Nobody walks out the door and declares “I’d like to buy an MVNO today.” Instead, customers want a service that suits their needs and demands. Usually, it’s all linked to a particular sector or customer segment.
James mentions an enabler that covers these different growth areas, which is “MVNO in a box.” While it’s just an MVNA “in a different skirt”, it’s a service set to achieve 250% revenue growth by 2029. That rapid growth comes from “enabling MVNOs easily” across multiple sectors, including retail.
This is where “the big growth is”, considering these brands have a large customer base and vast distribution abilities. Tesco Mobile continues to dominate that space, with Asda Mobile still operating. We won’t dwell too long on the now-defunct Mobile by Sainsbury’s, which James launched while acting as Marketing Director at Sainsbury’s…
There is still potential for the likes of Aldi and Lidl to compete, but in Adrian’s view, Tesco’s continued dominance may dissuade them. Recent economic turmoil also influenced these large retailers to focus more on their “core business” rather than expand their ranges. Being more specific and targeted meant to needless risks were taken.
That direct relationship with customers is also crucial, as offers can be targeted through their phones. They’ll need an app to check their data usage, allowing retailers to reinforce that relationship there and then.
The level of investment, while lower, may have also been a factor. CFOs will want to see evidence of fast ROI rather than taking a “leap of faith.” Although there are worldwide case studies of MVNO success stories, including the Walmart-owned Bait in Mexico, those traditionally-minded leaders won’t be inclined to conduct such an operation.
Getting an MVNO off the ground requires thinking, planning, strategic intent, and someone buying into it. But James is right – the “upside is significant.”
Then there’s altnets
Altnets are the smaller broadband providers providing their own independent network. Some sources estimate that the number operating in the UK is as high as 130. In any case, they provide (surprisingly enough) an alternative to those traditional nationwide providers.
James uses Utility Warehouse as an example, having diversified their portfolio to include gas, electricity, broadband and financial services. They could sustain growth while electricity prices started “going the wrong way”. Altnets are certainly an “incredible area of opportunity.”
For James, there are similarities between utilities and altnets. Both have that existing billing relationship with customers and are trusted to manage it. They can add on more offerings and provide a well-rounded service that meets customer needs.
A good proposition
The “new, interesting [MVNOs]” are those concerned with communities, both online and beyond. Influencers can sway their follower’s opinions to buy a certain product, as we’ve seen happen with energy drinks and the like. Sports and charitable communities are ones built on shared values and provide another route for customer access.
The “machine to machine” aspect, or IoT, is also worth mentioning. MVNOs that can provide “SIMs in things” rather than SIMs for people are ones that can achieve rapid growth. For B2B companies and their customers, that machine to machine communication is appealing as it drives efficiency and saves money through better resource allocation.
For Adrian, a good proposition is one that’s compelling.
Approaching the market
As mentioned before, the market is competitive and MVNO propositions must be eye-catching. Influencers and their “unique business”, for example, can potentially interject telecommunications as they “drive [their] content and… [their profile].” It may not be an energy drink or chicken shop chain, but an MVNO does expand the brand.
Of course, it’s all “about the brand”, so having an MVNA sitting behind and “doing all the other stuff” is a must-have. For James, a trusted provider can protect that brand and deliver what’s needed to keep it intact.
Successful MVNOs are ones built with community and customers in mind. Football clubs in Spain, Italy and Brazil have launched MVNOs, and are designed to give fans “the inside track” on everything on and off the pitch. It’s not enough to just stick on a badge and chuck it to those passionate fans – they want that full, community-minded experience.
James’s multiple speaking engagements at MVNO conferences confirmed his view that the B2B space is one “ripe for innovation and challenge.” Those B2B customers want a better digital experience, which technology can provide. We all want a better customer experience, and while B2B companies have to deal with multiple customers and their needs, things will start to “open up.”
That’s what makes technology like eSIMs so exciting. By 2030, around 76% of smartphones will be using eSIMs, and B2B companies shouldn’t delay in looking to adopt this technology. When building that MVNO and a “purely digital experience”, there’s plenty for these businesses to do.
An MVNO that stands out
Launching an MVNO comes with own challenges and opportunities. The details behind the market itself, unique propositions and the target audience all help to build an MVNO that stands out from the crowd. But all that starts by working with the right provider.
Gamma has the knowledge and resources needed to bring such a service to life. We can be that partner with the tailored solutions required to helps businesses grow and secure customer loyalty. It’s never been easier to launch your own mobile services and thrive in such a competitive market.
There’s a world of opportunity out there; that growing MVNO marker is there to be seized.