MVNO Benefits for MNO

MVNO Benefits for MNO

MVNO Benefits for Mobile Operators

Telecom operators cater their services and marketing to mass segments – in a so called ”one-size-fits-all approach. However, as customers have different taste, values and culture, some customers will feel they don’t belong and that the services are not aimed at them.

These customers are highly likely to seek other options, and move to another operator = Revenue from these subscribers is lost.

Figure 1: Subscribers churn to other operators
MVNO MNO Benefits - One size fits all
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This is where the value of partnering with an MVNO comes in. A MVNO will typically target niche segments where the telecom operator has less success, and thereby act as a magnet/filter, avoiding customers to churn to the competitors.

Because the MVNO is a partner and hosted on the network of Telecom Operator 1, the MVNO will send back revenue to Telecom Operator 1 from these churning customers.

So even if some customers from Telecom Operator 1 decided to churn to the MVNO, Telecom Operator 1 would still make revenue on these lost customers, and this revenue would be pure profit for the operator, as the MVNO now has the associated (OPEX/CAPEX) costs e.g.: Marketing costs, Customer acquisition costs, Handset subsidies, Value-added services costs and ongoing Customer maintenance costs, etc.


Figure 2: The MVNO can act as a filter for churning subscribers
MVNO MNO Benefits Churn
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The other Telecom operators have the exact same problem, that some of their users feel they don’t belong, and will look for other alternatives. This creates a second traffic of revenue to operator 1, who partnered with the MVNO, as the MVNO takes on some of these churning customers from the other operators.

Figure 3: The MVNO taking subscribers from the competition
MVNO MNO Benefits - New network subscribers
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...and of course, further revenue to telecom operator 1 from new subscribers entering the market and choosig the MVNO from the start.

Figure 4: New subscribers in the market

MVNO MNO Benefits - 3 Revenue sources
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This provides Telecom Operator 1, who is hosting the MVNO with 3 revenue streams. 

Figure 5: The MVNO provides the host operator with 3 revenue streams

MVNO MNO Benefits - Revenue and profit
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MVNOs often come with a strong brand, and a niche focus that provides the mobile operator the means to minimize the impact on churn. Partnering with, and including MVNOs into its marketing mix, the mobile operator can achieve revenue from specific market segments where the mobile operator hasn’t been successful.

If a customer of the host operator churns to the MVNO, it is highly likely the customer would have left anyway. However, it is better that a customer churns to a MVNO on your network, than to the competitor, because you will still make revenue from the lost customer via your MVNO partner.
If the customer churns to your competitor, all revenue from that customer will be lost.

Network operators are continuously investing heavily into spectrum licenses and infrastructure to keep up with demand and new technology. These new investments are resulting in capacity which needs to be fully utilized as much and as soon as possible. A MVNO strategy can fill this gap and generate economies of scale for better network utilization.

The MVNO/MNO partnership comes with the following benefits and opportunities for the mobile operators.

  • Financial Benefits: New revenue streams Higher margins Quicker return of investment.

  • Strategic Benefits: Niche segment tapping Use MVNOs in segments where the competitor is strong  Obtain greater share of the total market traffic.

  • Operational Benefits: Network utilization Share business processes to increase overall performance.

  • Marketing Benefits: Minimize churn Grow market Cross-sell More value, innovation and choice for the end-users Saved retail costs can be used to increase customer retention.