Pakistan’s MVNO rules just got real. Operators need a distinct wholesale strategy.
When I wrote about Pakistan’s Telecommunications Authority’s move to open the MVNO market, I raised the question as to whether the decision was genuinely intent on opening competition following market consolidation.
I raised the point, because, unlike other regulators that use MVNOs to rebalance competition, the announcement from the PTA carried no stipulations on reference offers, access pricing, or even a wholesale obligation of any kind.
The intent was reliant on MNOs voluntarily accepting approaches for an MVNO on their network and playing nicely if they went ahead. This also included trust that an MNO wouldn’t blur the lines between MVNO, flanker and sub-brands.
This week, we witnessed the impact few guardrails have, when the PTA ordered Pak Telecom, owner of Ufone, to stop trading ONIC, because it was deemed to be an MVNO not a sub-brand. As part of its ruling, PTA noted that Pak had in effect circumnavigated the MVNO rules. Pak has three months to migrate the ONIC customers on to the core MNO.
It looks like a duck, sounds like a duck…
The PTA edict sends a firm message to the market: Pakistan is looking for real MVNO competition, not new brands operated by an existing MNO under a different commercial and operational structure.
That distinction is important. ONIC was positioned as a digital-first proposition, with its own brand, price plans, app and customer proposition. But the PTA argued that when you lift the bonnet the underlying operating model tells a different story, leaving the PTA to conclude that the proposition falls within the MVNO framework.
It highlights that even experienced teams can get it wrong, especially if the rules are left to interpretation. Circles, which underpins ONIC, is not new to MVNOs. It operates its own digital telco propositions while also providing technology and platform capabilities to other MVNO businesses.
The fact that an experienced telecoms organisation, working alongside an established operator, has ended up on the wrong side of the regulator’s mandate is therefore a surprise.
And there lies the lesson for every MNO considering its next move.
Wholesale needs to be a strategy, not a side project
The Pakistan’s MVNO framework still presents a significant opportunity for new market entrants. But if operators want to capture new wholesale revenues, they need to treat wholesale as a singular business unit.
That means MNOs must separate the wholesale business away from the core business, so the wholesale team sits independently, with clear governance, dedicated commercial capability, and, above all, awholesale strategy.
The PTA will not tolerate those who take an existing retail proposition and wrap another brand around it. Instead, operators need to consider how they can use MVNOs to grow their business, and as part of this decide which types of customers they want to bring onto their network through wholesale and, perhaps more crucially, why.
All around the world are examples of MNOs who use MVNOs to reach segments that the core brand will never attract. They’ve tapped into the power of brands in retail and consumer electronics, even sport clubs, to win share in specific verticals, meet the needs of underserved customer groups, and launch digital propositions that appeal to different demographics. More often than not, they’ve also included strategic distribution partnerships to generate genuine incremental growth.
Being selective is the key to success.
A well-designed wholesale strategy allows an operator to identify the types of partners that add value, target the segments where there is a gap in the market, and structure propositions that grow network revenues without simply cannibalising the existing retail base.
But I cannot stress enough the importance of recognising the distinct difference between selective wholesale and protecting the retail business, because as we’ve seen with ONIC, getting the boundaries between commercial, operational and regulatory wrong is expensive.
Operators have a huge amount to gain, but they can only achieve success if they build an exclusive wholesale strategy, one that sets a clear direction for growth. It needs to be built on critical insights, underpinned by a carefully designed wholesale commercial model.
It also requires a clear technology roadmap and the supporting infrastructure MVNOs need to succeed beyond a good deal on wholesale pricing, such as customer service and marketing support. The relationship will then work two ways. MVNOs will get value from the partnership and grow, creating growth for the host.
I’m in no doubt that Pakistan’s new MVNO regime can bring new brands, new distribution models and new sources of incremental growth into a mature mobile market. But to make it a reality, it’s clear operators need to start playing by the new rules sooner rather than later.
At Graystone, we’ve developed high growth wholesale strategies for operators, MVNOs, MVNAs and MVNEs across multiple global markets. We’re well-placed to help Pakistan’s MNOs capitalise on early mover advantage, so contact me to discuss how we’d do it for you.
