Developing markets will dominate MVNO subscriber growth in AP with 2013

Released: 6th March 2009
The Indian government’s approval of the Telecommunications RegularityAuthority of India (TRAI)’s recommendations to allow MVNOs in the countryprovides an opportunity for existing operators.

“The MVNO model will be an opportunity for GSM operators without a 3Glicense to offer WCDMA services” says James Moore, research analyst andIndia expert at Informa Telecoms & Media. “The limit on WCDMA spectrummeans that many GSM operators will need to follow this route if they are tooffer WCDMA services, assuming the WCDMA operators allow them to use theirnetwork. " Informa forecasts that mobile broadband revenues will reach $3.9billion in India in 2013 and if GSM operators want to capture a share ofthis they will need to offer WCDMA services.

However, opportunities for GSM MVNOs are more limited. The GSM space iscrowded and so the business case for MVNOs is more limited. “An opportunityhere will have to be orientated towards targeting a particular nichesegment,” argues Moore. “It’s going to be incredibly difficult for MVNOsto make their presence felt in the Indian market as it has some of thelowest mobile tariffs in the world."

Mark Newman, Informa Telecoms & Media's Chief Research Officer, says theopportunity for start-up MVNOs offering basic voice and SMS is much lessobvious in India than in Europe where mobile operators’ own retailoperations are incredibly costly and sometimes inefficient. “Many EuropeanMVNOs only employ 10 or 20 people whereas mobile operators have hugein-house retail teams, a shop in every high street and pay huge connectionfees to third party service providers and dealers’”, says Newman. Indianoperators on the other hand are much leaner and spend less on retail, theresult being that they are able to set prices as low as $0.01 per minute.

Despite its relatively modest share of the global mobile market, the MVNOsector remains robust and shows plenty of potential for growth according toInforma Telecoms & Media’s strategic research report Future MVNOStrategies: Customer Segmentation and Market Evolution.

The Asia Pacific developing region is still a fairly immature MVNO marketbut the report predicts the Indian market will help to boost MVNO subscribernumbers towards the end of the 2008-2013 forecast period. Virgin’s successin entering the Indian mobile market through a franchise agreement with Tatawas an early indication of the potential in the Indian market.By 2013 the Asia Pacific developing region which includes India will be thefourth largest MVNO market, with only Western and Eastern Europe and NorthAmerica constituting larger regional markets.

Although MVNO subscriber numbers in the Asia Pacific developing region wereonly 14.3 million in 2008, by 2013 they are forecast to hit 20.4 million.Much of the growth in the Asia Pacific region is expected to come fromdeveloping markets such as India.

The report forecasts that by 2013 the 3.7 million MVNO subscribers forecastfor the AP developed region (Australia, Hong Kong, Japan, South Korea, NewZealand, Singapore, Taiwan) will be dwarfed by the 20.4 million subscribersin the AP developing region (the remaining AP countries including India).One of the reasons for this is that mobile network operators in developed APmarkets like Japan and South Korea have been good at using sub-brands totarget segments that in other markets are typically targeted by MVNOs.