MVNO Benefits for MNO

MVNO benefits for MNO
Mobile network operators (MNOs) partnerships with mobile virtual network operators (MVNOs) is a mutually beneficial arrangement that help both parties grow their businesses and improve their bottom lines.

🅐 Telecom operators cater their services and marketing to mass segments – in a so called ”one-size-fits-all approach.

Figure 1: Mobile subscribers churn to other operators. 

MVNO benefits for mobile network operators (MNO)

🅑 However, customers have different taste, values and culture and some customers feel they don’t belong as the services are not aimed at them. These customers are highly likely to seek other options, and move to another operator = all revenue from these customers is lost.

The benefits for a MNO in partnering with an MVNO

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.

Figure 2: The MVNO can act as a filter for churning subscribers.

MVNO benefits for mobile network operators (MNO)

Because the MVNO is a partner and hosted on the network of Telecom Operator 1 (MNO1), 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 3: The MVNO taking subscribers from the competition.

MVNO benefits for mobile network operators (MNO)

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 4: New subscribers in the market.

MVNO benefits for MNO

… and of course, further revenue to telecom operator 1 from new subscribers entering the market and choosing the MVNO from the start.

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

MVNO benefits for mobile network operators (MNO)

This provides the mobile network operator (MNO 1), who is hosting the MVNO with 3 revenue streams.

Key Takeaways

  • If a host MNO customer churns to the MVNO, it's highly likely that customer would have left anyway.
  • It is better that a customer churns to a MVNO on the MNO’s own network, than to the competitor, because the MNO will still make revenue from the lost customer via the MVNO partner.
  • If the customer churns to the competitor or a MVNO on the competitor’s network, all revenue from that customer will be lost.

MNO Market Approach vs. Market Segment Approach with MVNOs

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.

In saturated – or near saturated markets, as organic growth wears off, competition becomes a quest for market share, and this challenge leads MNOs to seek for MVNO partnerships to sustain the overall market growth.

Figure 6: MNO market share without, and with MVNO.

Benefits of MVNO for MNO

Partnering with MVNOs will allow the MNO to address specific market niches, which the MNO has not yet tapped into – incurring lower Subscriber Acquisition Costs (SAC) and add efficiency to the value chain by creating offers aligned to the needs of each of the existing segments.

Figure 7: MNO Market Approach vs. Market Segment Approach with MVNOs.

MNO Market Approach vs. Market Segment Approach with MVNOs
Financial benefits from MVNO collaboration

Besides being a source of growth, MVNOs are creating a significant advantages for the MNOs in terms of improving its business profitability.

Figure 11: MVNO creating advantages for the MNO in terms of business profitability.

MVNOs create business profitability for MNOs
  • Subscriber Acquisition Cost (SAC) for an MNO is almost zero, as the Subscriber Acquisition Cost is transferred to the MVNO.
  • Average Revenue per User (ARPU) for the host MNO, is only slightly lower with MVNO than the ARPU for the MNO without MVNO.
  • EBITDA margin percentage of the wholesale business, is much higher than that of the retail one for MNOs without MVNOs.

For the MNO, the EBITDA margins for customers acquired by the MVNO is 3 times the margin from retail.

MVNOs help MNOs to drastically improve their EBITDA margins by reducing Subscriber Acquisition Cost (SAC) costs with only a slight reduction in Average Revenue per User (ARPU)

From a Single Brand MNO to a MVNO Multi-brand/Segmentation Strategy

The multi-segment, multi-brand approach is not new, but built on experience from other industries such as the automotive industry. Today, the automotive market is heavily segmented and most car manufacturers actually own multiple automotive bands, each focused on a specific market segment with the product tailored for the unique needs of that segment.

Figure 8: Volkswagen’s shift from a single brand to a multi-brand, multi-segmentation strategy.

From a Single Brand MNO to a Multi-brand Multi-Segmented MVNO Strategy

One of the key competitive advantages of brands is that they have a thorough knowledge of their users, allowing them to cater to that segment in a far more personal, relevant way than MNOs can, and the strategy has been adopted by various MNOs around the world.

Figure 9: Example of MNOs who have adapted the multi-segmentation MVNO model via MVNA/MVNE partners.

Example MNOs who have adapted the multi-segmentation MVNO model via MVNA/MVNE partners


In July 2016, Cell C revealed that it’s MVNO partners had managed to attract more than a million customers. Cell C’s had invested in a MVNE platform, which allowed them to launch MVNOs in a very efficient manner.

  • The MVNOs owns the customers
  • Services are offered under the MVNOs brand
  • The MVNOs design and decide the tariffs
  • Customer relation is managed by the MVNOs
  • The MVNOs is in charge of marketing, distribution, customer insights

Cell C CEO Jose Dos Santos said: “Cell C has created a focused strategy to embrace sound partnerships with exceptional brands. This has allowed us to grow the MVNO base substantially.”

In its FY 2017 report, Cell C’s reported its MVNE/MVNO strategy had been a key contributor to the revenue growth, with MVNO wholesale revenue increasing by 79% to USD 52.8M YoY and MVNO customers reaching 1.5M.

In 2018 wholesale revenue was USD 47.12M and MVNO subscribers 1.68M. In 2019 wholesale revenue reached USD 53.55M and MVNO subscribers 1.91M.

In its H1 2020 result Cell C announced an 18% increase in revenue to USD 22.6M from MVNE/MVNO, as an important part of its turnaround strategy.
In first half of 2021, wholesale subscribers through MVNE/MVNO reached 2M.

Figure 10: MNO CELL C’s multi-segmentation MVNO model.

Cell Cs multi-segmentation MVNA MVNE MVNO model
MVNA / MVNO strategy pays off for Tele2 Russia

In May 2017, Russian operator Tele2 launched its “MVNO factory” strategy. The strategy enabled Tele2 to host a range of MVNOs in various niches.

The “MVNO factory” has been a vital part of the operators rapid growth in the market. In the period 2017-2018 the overall MVNO subscriber base in Russia grew to 3.2M with Tele2´s MVNOs accounting for 1.75M of those, representing a growth of 75%

At the end of 2019 – Tele2 had 21 MVNOs in the “factory”, serving 3.75M subscribers out of 10M total MVNO subscribers in the market (4% of total mobile subscribers in Russia), increasing Tele2’s revenue from the “factory” 133% year on year.

As of December 2020, Tele2 MVNO partners served a combined subscriber base around 4.5 million. The MVNOs include: Rostelecom, Sberbank, Virgin Connect, Tinkoff Bank, Centr2M, MS-SpetsTelecom, MCN Telecom, TTK, Easy4, SIM SIM, V -Tell, Gazprombank, VTB Bank and others.

Figure 11: Tele 2’s multi-segmentation MVNE/MVNO factory

Tele 2s MVNE MVNO factory strategy

What the mobile operators are saying about MVNO partnerships

BT on MVNO partnership
“If we want to maximize market share and our share price for our shareholders, we need to be in this space”
Nick Wootten
MVNO director at BT Wholesale
Deutsche Telekom on MVNO partnerships
“No MNO can cover all the different use cases out there.I would say there is still plenty of room for IoT MVNOs”
Federico Homberg
BD & Innovation Deutsche Telekom
Vodafone on MVNO partnership
“What we recognize is that we need mobile virtual network operators (MVNO) to grow and bring scale to our business”
Mike Cartwright
Head of wholesale at Vodafone UK
Orange on MVNO partnerships
“The momentum Orange has seen in the market forms a key part of Orange’s overall mobile wholesale strategy”
Yannick Decaux
VP MNOs & Partners Orange Wholesale

MVNO / MNO Benefit Conclusion

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 and sustainability.

A MVNO partnership brings the following benefits and opportunities for the mobile operator.

Financial Benefits: New revenue streams • Higher margins • Quicker return of investment • Reducing costs (increasing the EBITDA).

Strategic Benefits: Niche segment tapping • Use MVNOs in segments where the competitor is strong • Obtain greater share of the total market traffic • New distribution channels, reach new consumers in unserved/underserved market segments.

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

Sustainability + ESG: The operators network and capacity is setup to take a certain amount of usage + peak, this wasted capacity is being “produced” daily. MVNOs are paying for and putting this wasted capacity to use.

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.


Author: Allan Rasmussen
Managing director at Yozzo. Allan is a MVNA/MVNE/MVNO specialist with hands-on experience from more than 60 projects in both competitive and greenfield markets. His expertise includes business case development, execution, launch and growth strategies. Advisor and consultant to mobile network operators, MVNA, MVNE, MVNO, National Regulatory Authorities, Government Agencies, Broadcast Companies, TMT Industry Associations, Innovation and Investment Banks.

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