When should network operators release the MVNO Genie?

During my time at a major global network operator one of the most frequently asked questions I received from the heads of our emerging markets was “when should we consider a wholesale strategy?”

It’s an important strategic question and one that is often brought into sharper focus if the regulator is starting to make indications that it feels competition needs a boost.

There is no simple answer to this question. Much is determined by the local market conditions, the number of networks in the market and the network’s position relative to its competitors.

There are however a number of questions that the board can ask of themselves which will help to make the decision on whether to develop a wholesale or partnering strategy.

  1. What’s our position in the market?

 Understanding your market position relative to your competitors is a good place to start. Typically it’s true that the network with the least market share is often the first to embrace a wholesale strategy. This is because it is an effective way to grow share rapidly and more often than not do so cost effectively whilst also filling unused network capacity.

  1. What are you famous for?

Often when we segment a mobile network’s customer base we will see that they significantly over or under index on certain customer segments. This could be because of their existing brand positioning, access to sales channels or competitor activity.

For example, a mobile network that has actively targeted younger customers may well have challenges translating the brand into one that suits the business market. It can be hard to be credible if your brand is seen as fun not serious.

However this could be overcome by addressing business customers with an alternative more corporate brand positioning, a second ‘sub’ brand, or by partnering with a brand that already has access to those customers, such as an IT reseller or a provider of fixed telecoms services. You can read an interesting perspective on how MNOs are using sub brands in our blog “Operator sub brands- the death of MVNOs?”

  1. What are your motivations?

 In more mature markets discussions are often triggered by the risk of regulatory intervention. Often networks are forced to offer MVNOs under specific trading conditions, usually more challenging ones.

But in my experience, a defensive MVNO strategy is flawed thinking.

If you are considering a wholesale strategy you must build your plans around winning market share and growing incremental customers. In short, if you are prepared to let the genie out of the bottle then you must also be prepared to bear the brunt of unleashing a wholesale strategy that will, in part, cannibalise your retail business. There is always this trade off for longer-term gain.

But remember, if you are having these discussions then be sure that your competitors are too. Once someone releases the genie you pretty much all need to be open for wholesale business. The alternative is to aggressively compete against the new entrants with your retail brand – an option which is expensive to achieve and likely to erode revenue.

  1. How selective should we be?

 Very. Once you are committed to wholesale or partnering ensure that you have a clear strategy defining what you want to achieve and the types of partners that will help you to achieve your goals.

A ‘come one, come all’ approach is likely to be inefficient, costly and doomed to failure whereas a highly selective approach where you choose partners who have complementary skill sets, strong brands, excellent distribution models with access to customers in markets that are appealing to you, is far more likely to succeed and allow you to place your scarce resources where you will see greatest return.


  1. Is it worth it?

 Ultimately this decision is a big one, changing the market dynamics and actively increasing competition is always going to be a decision that should be given enormous scrutiny, supported by significant analysis, some experienced advice and a healthy dose of courage and entrepreneurial spirit.

At Graystone Strategy we have extensive experience working with both MNOs and MVNOs at varying stages of the market lifecycle, so if you are wondering whether it’s time to let that genie out why not contact us or give us a call on +44 2078460276.

James Gray

About James Gray

James has over 20 years of experience working in the telecoms and retail industries. He is an expert in subscription-based business models, CRM, direct and indirect channel management and major proposition development and launches. He has held a number of Marketing Director and Consumer Director roles.