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.  

The post Pakistan’s MVNO rules just got real. Operators need a distinct wholesale strategy.  appeared first on Graystone Strategy.

At almost the same time as the merger closed, the Pakistan PTA opened applications for MVNO licences. Since then, enquiries to our team have centred on which route-to-market strategy to follow, given the significant drop in the licence fee from $5m to $140,000 and some of the licensing framework arrangements that are in play. 

What’s driving this?

Usually, MVNO licensing is opened when a regulator wants to rebalance competition after
consolidation has handed a single operator significant market power. Pakistan’s timing fits that pattern almost too neatly: the licensing window opened in late June, days before the merger closed. But the framework itself tells a different story. It carries no reference offer, no access pricing, no wholesale obligation of any kind. Whatever it is, it isn’t a remedy.

The real drivers sit upstream, in economic policy. Uraan Pakistan, the government’s National
Economic Transformation Plan 2024–29, makes “E-Pakistan” one of its five pillars and hangs an
ambition to double exports to around $60 billion by 2029 on digitalisation.

The Digital Nation Pakistan Act, in force since January 2025, created the Pakistan Digital Authority under a commission chaired by the Prime Minister. Both need digital services to reach people that telco retail hasn’t.

With the sector past 200 million subscribers and growth now coming from data rather than SIMs,
MVNOs are the cheapest instrument available: fintechs, ISPs, cable operators and technology firms brought into mobile without a rupee of new spectrum or infrastructure.

This is growth policy wearing competition policy’s clothes and is precisely why the wholesale terms were left to the market. 

No regulated wholesale access 

As approvals and integration work for the merged entity progress, we could expect to see some regulatory remedies tied to it. Until then, and unlike other jurisdictions around the world, Pakistan hasn’t introduced regulated wholesale access. 

MNOs are under no obligation to accept MVNO applications, publish wholesale pricing or offer standard commercial terms. They decide who they partner with, on what terms, and at what price. 

For MVNOs, this means entry depends on finding an MNO partner willing to use MVNOs to reach a market segment they can’t otherwise serve, and one who will offer fair terms. 

Narrow safeguards 

The safeguards that do exist are narrow. An MNO cannot degrade, suspend or terminate an MVNO’s service without PTA approval. And every commercial agreement must be submitted to PTA and approved before it takes effect. Once approved, neither party can change it without PTA’s written consent.  

That is protection of a kind, but it is procedural, not economic. Nothing in it guarantees fair wholesale pricing. It also cuts both ways: an MVNO that negotiates badly will not be walking away from that agreement quickly. 

Proving strategic value is critical 

It means every MVNO needs to prove the value they will bring in terms of incremental subscribers and be ready to negotiate terms that make the ambition a reality. More importantly, every operator will need to set fundamental strategic foundations to ensure participation in the new MVNO era supports growth. 

It’s worth noting that MNOs who have done this in other parts of the world use a strategic scorecard for the type of MVNOs they will partner with. This gives clarity of purpose, enables the wholesale teams to understand who they should work with, and gives clear strategic reasons to MVNOs and regulators why an MVNO may not have got a deal. 

There are some ‘watchouts’ for MNOs in all of this. Price too high, or with too many complex clauses and not enough support built in, and MVNOs could fail before they even start. Not only that, if MVNOs discover there are better terms to be had elsewhere, they will leave at the first opportunity the agreement allows. 

Getting this right is crucial. Let’s not forget, MVNOs don’t come in one size. Full, light, MVNE-enabled and even MVNA models are all viable options. The framework itself is silent on this. It licenses a single MVNO category and says nothing about technical models, so which of them gets built in Pakistan is a matter of MNO strategy, not regulation. And that strategy could be just as varied as the models themselves. 

What paths might the remaining MNOs follow? 

For Jazz, the market leader, wholesale could become a strategic imperative. It’s a controlled way of expanding into adjacent customer segments (ie ones it can’t reach otherwise) and do so without diluting its own retail brand. It’s also a way to protect retail margins, a perpetual problem for operators everywhere. 

Above all, Jazz needs to be acutely aware it can’t operate in a vacuum. The ‘prisoner’s dilemma’ can’t be overstated, and the margin here is thinner than most. With less than half a point separating Jazz from the merged entity, a single well-executed MVNO deal on a competitor’s network could change who leads this market. It therefore makes sense to have the traffic remain on its network, with control of the deal and value through wholesale pricing, rather than be a victim of a competitor’s strategy. 

For Zong, which has a lower market share, wholesale could be exactly what it needs. Following an MVNO strategy would open the distribution channel and help drive incremental growth in a mature market. 

In our experience, the smallest operator almost always has the most aggressive wholesale strategy. They have the most to gain and the least to lose. Virgin Mobile proved this when it became the world’s first major MVNO. It happened because One2One, later T-Mobile UK, was the smallest operator in the UK in 1999, and was full of growth ambition. 

Whereas for e&, there’s a different dilemma. Does it use wholesale to shore up revenue in a business going through massive upheaval, bringing two brands, sets of processes, employees and infrastructure together? Or does it wait, get the foundations right, but risk missing the MVNO boat? 

It could viably take an easy route and only offer full MVNOs, assuming it has the capability to do the technical integrations to make it happen. 

Fortune rests on multiple factors 

For each of the operators, the answer will have a material impact on their own fortunes and on the overall market’s success. Pakistan’s economic and digital ambitions set a new tone for mobile, especially in a market which can no longer rely on subscriber growth. 

When you look at other regions around the world using MVNOs to unlock innovation and growth, success has come down to multiple factors. There’s never one single golden arrow. 

Brand differentiation from the competition, targeting a clear market segment with an innovative offer, managing channel costs and changing the overall model are all as important as each other. 

It’s also worth noting that in less developed markets there is always initial success with price challengers, but this isn’t sustainable in the long term. And absolutely nothing is possible until the market has foundation commercials that enable a reasonable level of margin to fuel business growth. 

MNOs are not competing with MVNOs.  

Pakistan faces a competitive dynamic it hasn’t seen before, and strategy directors need to reframe their thinking. This isn’t about MNOs competing with MVNOs. It is about MNOs competing to attract the MVNOs that will deliver incremental customers to their network and deny competitor networks the chance to take customers from their existing base. 

That is the paradox at the heart of this market opening. The regulator has opened the door to competition but made cooperation the only way through it, leaving the terms of cooperation entirely to the operators that the newcomers will compete against. 

Operators therefore need to set out what type of MVNOs they want to attract, and how. But most of all they need to commit and get it right first time. Afterall, fortune favours the brave.  

What’s your strategy? If you need help determining your wholesale approach, then get in touch.

We’ve done this analysis and strategic development in numerous markets facing the same market shift, with countless success stories to show for it.

The post Pakistan’s MVNO Cooperation Paradox  appeared first on Graystone Strategy.

Member only pricing sits at the core of the offer. Membership is £39.99, unlocking benefits that includes free delivery, extra savings, unpacking and recycling services for retail purchases, and finance deals on SIM free phones every 24 months. 

Plus there’s an exclusive ‘one size fits all’ member tariff for £12. It’s a straightforward 30 day SIM only deal with 500GB, unlimited calls and texts. It also includes a reasonable 15GB of roaming with an option to top up with boosters. 

The obvious comparison to make is with iD Mobile, which falls under the Curry’s brand. iD has led the way in terms of electronic retail MVNO models, introducing a range of price plans from monthly to SIM only, and device bundles. This leverages its retail strengths and heritage inherited from Carphone Warehouse.  

However, what iD has not achieved yet, is a full integration into the Currys shopper base, whereas it’s clear this is very much the intention of AO. 

It will be interesting to see how this plays out particularly as both MVNOs are on the Vodafone network. There is no difference in coverage or network service so it will come down to proposition and value. 

Will embedded member benefits and simplicity win, or will the more traditional MNO approach of a wide range of tariffs, offers and handsets be preferable? It’s perhaps not something you can split in such a black and white way. Each brand knows its customers and has a proposition to suit. That said, I suspect the cautious approach from AO will need to change to be more bullish and give people a wider range of price plans to choose from.

The trend for retail MVNOs shows no signs of slowing

Of course, AO’s launch is part of an ongoing global trend of retailers launching MVNOs to make loyal customers even stickier. UK examples include Tesco Mobile, Asda Mobile, Superdrug Mobile, Coop Mobile, and further afield I’d point to the German retailer MediaMarkt’s Let’s Go Mobile brand and Bait from Walmart in Mexico. 

We’ll see more over the next 12-24 months. Lidl is already well on its way to introducing mobile in 30 markets and I firmly expect more to follow suit in Europe, but also emerging markets where regulators want to open up competition. It all supports the predictions that the segment will grow by 50% from $4.8bn to 7.3bn by 2031.

Is that really possible? Yes. Everywhere you look there are retailers with a large footprint that can use mobile to convert customer footfall into additional value and loyalty. From supermarkets, through technology stores to fashion brands, they all have the ingredients provided they can create a proposition full of unique value and strike wholesale terms to underpin growth. 

I’m also sure that sooner or later one of the highstreet banks will realise that they need to address the impact of Lendable, Revolut and the Neo banks. Consumers are open to this type of ‘retail’ offer too and with the right help, brands have it in their gift to capitalise on the opportunity quickly. 

But whichever brand is next, one thing is for sure, the UK MVNO environment remains as vibrant as ever. Just the way I like it! 

We have worked with retail brands in developed and emerging markets around the world, helping them understand the scale of the local opportunity and how to bring it to market (you can see how we’ve done it with Apple Premium Re-seller here). If you are a brand trying to understand how mobile will add value, and encourage customer stickiness then get in touch here.

Further reading 

The post AO Mobile introducing a new membership model to the UK mobile market  appeared first on Graystone Strategy.

Dig a little deeper and lack of focus on the bottom line or failure to understand the dynamics of a marginal business are often the root cause.

Why margins are under pressure

Average revenue per user (ARPU) has been declining for some time, but today’s economic environment has made the impact much more significant. 

Many network operators have responded by introducing annual inflation-linked price increases. Although this helps offset rising costs, it often damages customer relations and can lead to increased churn, something MVNOs have benefitted from.

Few MVNOs have this luxury. They may win customers from MVNOs who price hike, but there’s little point in the long-term if they can’t make sufficient margin to cover the acquisition cost.

There’s also the backdrop of wholesale arrangements, which can restrict the choices MVNOs have when it comes to making price adjustments.  

For instance, for MVNOs offering large data bundles or even unlimited, and relying on customers to use than they buy, (known as breakage), will find relatively few heavy users will break the model and erode all the margin. Edge cases really do matter in the breakage model.  have this model broken and all the margin eroded by a relatively small number of very heavy users.

Edge cases matter in the breakage model because in effect, the MVNO is paying more for wholesale data, yet unable to raise prices to compensate. The breakage that once contributed to healthy margins gradually disappears and the result is a steady erosion of profitability.

Even MVNOs that purchase fixed data bundles from their host network shouldn’t assume they are immune. While these arrangements may currently shield MVNOs from some of the risk, wholesale providers continually monitor usage trends. As customer behaviour changes, wholesale pricing is likely to evolve too, reducing today’s advantages over time.

There is no single solution

Margin recovery rarely comes from one dramatic change. Instead, the strongest results usually come from improving several areas of the business at the same time.

Small commercial improvements, operational efficiencies and product enhancements can combine to create a meaningful improvement in profitability. The trick is to do it without fundamentally changing the customer proposition. 

So, what are the four things we recommend?

1. Start with the wholesale agreement

For most MVNOs, wholesale costs represent the largest single expense, making them the obvious place to begin.

A contract review may uncover opportunities to negotiate improved commercial terms, marketing support, growth incentives or revised pricing structures.

However, successful negotiations require realistic expectations. Any concession from an MNO will almost certainly come with commitments in return, whether that’s longer contract terms, customer growth targets or other commercial obligations.

It’s also worth recognising that host networks are experiencing many of the same financial pressures. Their infrastructure costs are increasing, while their own retail businesses face similar margin challenges. Negotiations are therefore most effective when both parties can identify mutual long-term value rather than simply seeking short-term price reductions.

2. Understand your negotiating position

Before entering any wholesale discussions, it’s essential to understand the balance of power within the relationship. Read our negotiations blog here.

Suggesting a move to another network can be an effective negotiating tactic—but only if it’s genuinely viable and you are prepared to do it. Migrating customers between host networks carries significant operational risk. 

The risk mainly lies in customer disruption which can increase churn, increase customer support costs and reduce lifetime value. Host networks understand these risks and will challenge an MVNO’s willingness to switch. 

For that reason, any negotiation strategy should be based on careful commercial planning rather than tactical brinkmanship.

3. Focus on acquisition quality, not just volume

Another opportunity to steady margin lies in customer acquisition, or rather, attracting a better quality customer.

Of course, reducing acquisition costs is valuable, but winning higher-quality customers often delivers greater long-term returns.

It’s therefore vital MVNOs understand which customer segments generate the greatest lifetime value. [JG1] Bear in mind, it’s not always the customers on the biggest bundles. I’ve seen MVNOs be very successful with a good mix of medium to low users who are happy to spend a relatively small amount, use little data and stay forever.  

With this knowledge, they can invest in the most effective acquisition channels while reducing spend on lower-performing ones. Since channel performance changes over time, it’s crucial to do regular reviews of commission structures, incentives and marketing effectiveness.

If you take this path, then be aware that the objective isn’t necessarily to acquire the largest number of customers. A smaller base of loyal, profitable subscribers will often create more value than a large pool of price-sensitive, high-data users.

4. Create additional sources of value

Be warned that cost management alone won’t solve the margin challenge. Sustainable profitability also depends on increasing customer value.

Many MVNOs have opportunities to strengthen their proposition through complementary products and services. There are examples all over the world to take inspiration from. Everything from device insurance and cyber security services to family safety features, handset financing, entertainment bundles and broader multi-play offerings.These services can generate incremental revenue while also strengthening customer relationships. We’ve proven numerous times with our clients that value-added services improve retention, increase customer lifetime value and create additional differentiation in highly competitive markets.

Building healthier margins

Margin pressure isn’t going to go away. In fact, it will probably get tougher. Rising data usage, changing customer expectations and increasing operating costs mean MVNOs will need to continually adapt.

The brands that succeed will be those that treat margin management as an ongoing discipline rather than a one-off exercise. They will also understand that combining stronger wholesale agreements, employing better acquisition strategies, developing smarter customer segmentation and introducing enhanced propositions, will build more resilient, profitable businesses that are well positioned for long-term growth.

If you need help negotiating better wholesale arrangements to drive margin improvement, then talk to us. We’ve helped MVNOs all around the world adopt strategies for continuous margin management and grow their business as a result. 

For further reading, see our ‘The art of the wholesale deal:5 things Every MVNO must do‘ blog.

The post Margin Squeeze in the MVNO Market: Four practical ways to protect profit appeared first on Graystone Strategy.

Haast’s fast gaining traction because its AI powered compliance platform alerts companies to risk of legal breaches and compliance bottlenecks when completing business tasks such as preparing and agreeing contracts, through to developing content and marketing campaigns. It’s designed to be multi-language and work across highly regulated industries including telecoms, utilities, pharma and finance. 

This disruptive approach to using AI for compliance has helped it win numerous Fortune 500 companies and international brands including Telstra, Aviva, and Zurich.

Building a channel partnership pipeline

Under the terms of the partnership, James Gray, managing director of Graystone Strategy, and Paul Jefferies, associate client director, will use their global expertise in go-to-market strategy and segmentation in the telecoms industry and parallel sectors to help Haast expand into the fixed and mobile sector, and related industries such as utilities and mobile phone insurance. 

“We’re excited to be working with Haast, which is fast becoming the leader in AI compliance management in complex, regulated sectors. Haast’s growth trajectory shows a strong appetite among business leaders to use its platform to transform how they operate,” said James Gray, managing director of Graystone Strategy. 

“Haast’s innovative platform is designed to provide an extra pair of hands for in-house legal teams, accelerating the parts of the compliance process that slow them down. The result is a legal function that can move at the pace of the business – without compromising on regulatory commitments.”

Paul Jefferies, associate client director at Graystone Strategy, explains why telecoms is a prime candidate for distribution: “Our goal is to help Haast build partnerships in the telco market. Telecoms is a prime example of a fast-paced, complex and regulated industry that must constantly find ways to unlock more efficiency and stay ahead of the competition.”

“We think Haast will give telcos the capability to do more in less time, and will be especially useful for organisations that can’t afford more legal resources, despite recognising its value to their business,” Paul concludes.

Haast’s platform offers UK businesses an efficient, scalable way to ensure that compliance doesn’t hinder growth, as Wessel Van Keulen, Founding AE Europe at Haast explains: “Our platform can support legal processes in every facet of a business and cuts compliance review time by 80%. We’ve proven you can increase an existing team’s capability using AI and as a result, grow the business without putting compliance at risk.” 

“That’s why we are excited to work with Graystone Strategy to expand our reach in the UK,” Wessel adds. “The team’s deep understanding of the regulatory landscape and its expertise in go to market strategy will be invaluable as we scale our business growth and bring the benefits of AI-driven compliance to a wider telco audience.”

Business leaders interested in discussing how Haast can help drive AI compliance solutions for their business should contact the Graystone Strategy team at enquiries@graystone-strategy.com.  

The post Graystone Strategy inks strategic partnership with Haast to drive its AI compliance solutions in the UK market appeared first on Graystone Strategy.

We’re starting to see satellite take off in countries around the work where regulators are granting permission.

Top of mind is the UK, where, following Ofcom approval O2 Satellite is first out the blocks with its Starling backed services, and Vodafone has inked a deal with AST Space Mobile. In the US, Skylo, Verizon’s direct-to-device (D2D) partner, is the latest name to be seeking FCC approval for services to support IoT, smartphones and wearables.

The post The Art of the Wholesale Deal: Negotiate, renegotiate, grow appeared first on Graystone Strategy.

The post 1 Year On: How Has the VodafoneThree Merger Changed the Market? appeared first on Graystone Strategy.

In terms of strategy, no. I think we could see it from a mile away. Timing wise, yes. To do it a year on from officially merging two brands was sooner than I, and no doubt markets and analysts, had expected. 

The deal is made up of a £4.3m cancellation of shares and an anticipated £700m cost and CAPEX saving. A decent chunk of change in anyone’s book.

This will be realised by bringing the 100% owned company into the Vodafone Group and leveraging ‘synergies’ and, undoubtedly benefits from technical consolidation.

There are other upsides. The big one being it will neutralise the political concerns about Chinese ownership of critical infrastructure. This is likely to sit well with large enterprise too.

Yesterday, I was asked if I thought this would trigger additional CMA interest.

My gut reaction is that it won’t. There is no real change for consumers, and you could argue that consumers will do better out of the leveraging of intra Vodafone Group benefits. 

Plus, originally there were some substantial competition remedies on the table to ensure consumer and wholesale competition remains at a level comfortable for the CMA.

Which leads me to unpacking another anniversary present / question. One year on, how effective have the remedies been?

Avid readers of my blogs during the run up to, and announcement of the merger will know that remedies were as follows:

1. Investment plan of £11bn to create the largest 5G SA network. This had to be delivered in 8 years with key milestones over that period.
2. Special tariffs that were identified as good value for cash challenged households must be retained for 3 years (2 years left now).
3. A commercial deal was done to allow the merged entity to remain in the site sharing agreement with O2, which involved O2 buying some spectrum from Vodafone Three.
4. A regulator wholesale reference offer was approved, the aim being to maintain competition in wholesale markets. Existing MVNOs also benefitted from some wholesale carve out.

So, has it been successful? At a general level, I would say the UK market is still competitive. The Three brand is still trading and advertising, and as a consumer I haven’t seen a massive price hike, above the usual inflationary increases that the MNOs level (MVNOs not so much). 

I am a Vodafone customer and have been since I started working for them in 2002, and overall I think I have seen improvements in coverage locally through the network sharing and deployment of MOCN.

We haven’t seen the massive MVNO bonanza as I was expecting. But then it’s only been a year.

But, we have seen launches mostly via MVNAs such as eSIMGo, Gigs and Gamma. This includes brands such as Zim, Tekmoni, Rocket mobile, Millwall and other football brands.

In terms of larger multinationals, Gigs has enabled Revolut on Vodafone Three, which is part of a broader mobile strategy across multiple markets. Interestingly, Revolut has used 1Global in other markets so there is healthy competition in Europe.

And we shouldn’t forget the 1Global deal with Lidl which is expected to bring up to 30 MVNOs globally. The UK is likely to be one market that Lidl seeks to build on its increasing grocery market share (8.5%) and a region where it can also integrate its loyalty app.

There have also been a large number of announcements of intent to launch, including AO, Monzo, Klarna and Netonmia.

Part of the remedies include the expectation that Vodafone Three will send an annual report to the CMA detailing progress against milestones and demonstrate that remedies are working as expected. We wait to see what comes out. 

Overall, I would say the wholesale market in the UK is still busy. Large brands are interested and 12 months is really early days, albeit we have used a third of the 3-year window for remedies. 

I would say the next 6-12 months are going to be critical and I am forecasting more, larger brands coming to market, which I’ll report on as they happen. 

So, all that remains to be said is ‘Happy birthday Vodafone Three’! Some surprises but largely expected performance.

The Graystone Strategy team is the official training partner at the MVNOs World congress, where we will deliver three masterclasses on all aspects of delivering a successful MVNO. They are free for conference attendees so be sure to secure your slot. And if you need help determining your MVNO strategy in the wake of this announcement, drop me a line. We’re always happy to give some initial advice. 

The post Vodafone Three’s buy out is no surprise, but what happens for MVNOs could be.  appeared first on Graystone Strategy.

Launching a retail MVNO is, of course, not a new idea. We’ve seen this happen all over the world. But I think it’s the scale that is breathtaking. It’s a huge statement of strategic intent from both sides, and a reminder that retail MVNOs remain one of the most powerful, and, in my opinion, underutilised, growth levers. 

Lidl’s ambition to leverage its retail footprint in multiple countries, combines ingredients successful retail MVNOs boast, including the option to distribute at scale and capitalise on high levels of consumer trust. 

Coupled with access to 1Global’s digital expertise, Lidl is on the road to creating a compelling mobile proposition that can be set directly into the retail experience.

The case for retail MVNOs

Looking back over the last five years, MVNO performance has rocketed and, in some countries, MVNOs post better growth than their operator hosts.  

Close to home, retail MVNOs account for over 40% of all MVNO subscribers in the UK. Tesco Mobile alone has over 5 million subscribers and has successfully expanded into Ireland, the Czech Republic, and Slovakia. 

Alongside it, brands like Asda Mobile, iD Mobile (from Currys), Coop Mobile, and Superdrug Mobile are showing that a close bond between the mobile and retail experience pays off. 

You don’t even have to be trading with shops either, as proved by AO’s announcement last June, that it too will launch an MVNO very soon. 

Internationally, the success stories are just as compelling. The standout example is the market disruptor Bait, Walmart’s MVNO in Mexico. It’s seen extraordinary growth and now holds the number two spot in market share, outperforming two established network operators. 

On the other side of the world, Aeon in Japan, and Woolworths in Australia, are great examples of retail MVNOs that work because they already had so many of the ingredients critical for a successful retail MVNO. 

So why do retail MVNOs work?

Having worked across multiple retail MVNOs, including iD in Ireland, Coop Mobile in the UK and Channel Islands, Asda Mobile, Superdrug Mobile, and even the now-retired Mobile by Sainsbury’s, I’ve seen firsthand what separates the successes from the also-rans.

It comes down to a few critical factors.

1. Unmatched customer access

The first, and arguably most important advantage is customer access.

Retailers like Asda and Tesco have tens of millions of customers passing through their stores every week. That level of engagement dwarfs what traditional mobile operators can achieve. Mobile is a low-frequency interaction; grocery retail is often weekly, if not more.

Retailers also typically enjoy significantly higher Net Promoter Scores (NPS) than telecom operators. In simple terms, customers like supermarkets more and are willing to switch to them for their mobile.

2. Low customer acquisition costs and high lifetime value

Retailers with stores are perfectly placed to convert footfall into SIM sales at a fraction of the cost incurred by traditional operators. They have the space in store to allocate to sales either as concessions, or SIM displays at checkouts, and the staffing is taken care of. Plus, with a steady stream of customers through the door, there’s no need for expensive above the line marketing campaigns to drive awareness and footfall.

This dramatically lowers customer acquisition cost (CAC) and gives retailers the flexibility to invest more in customer offers such as bigger data bundles, better loyalty rewards, and / or compete aggressively on price. 

Retail MVNOs perform exceptionally well on key metrics like margin per square foot. I’ve seen how a small footprint in-store can generate disproportionately high lifetime value (CLV), especially when compared to the relatively thin margins on everyday grocery items.

3. Integration with loyalty

The real magic, however, lies in integration. The most successful retail MVNOs don’t treat mobile as a standalone product. They embed it into the broader shopping experience. This is where many weaker propositions fall.

When mobile is linked to loyalty schemes, member pricing, or exclusive discounts, it becomes far more compelling. Customers aren’t just buying a SIM, they’re unlocking additional value with a retailer they already engage with and trust.

And the benefits are felt both ways. Mobile drives retail, and retail drives mobile. As not only does the MVNO generate incremental, recurring monthly revenue, but it also drives the core retail business. 

Some of the best retail MVNOs I’ve seen, incentivise customers to increase their visits to store, and how much they spend using loyalty point accelerators, discounts, and vouchers. This results in significantly higher retail basket spend and improved customer loyalty.

4. Customer perception is king

Trail blazers like Tesco and Aldi Talk legitimised retail MVNOs 20+ years ago and won over generations of consumers who only grew up with the option of a big operator. The latest generation of mobile users have never known a market without MVNOs. The net result is that brand loyalty to MNOs has waned, and there’s a readiness to switch to brands that are not traditionally associated with telecoms. 

Lidl and 1GLOBAL make for a winning combination 

Lidl knows it can achieve the same results. It brings enormous scale, a strong value-led brand, and a growing digital and loyalty capability, and when blended with 1GLOBAL’s technical infrastructure and international reach, they’ll be able to execute across multiple markets. 

And, dare I say, with brands like Revolut in the 1GLOBAL stable who knows where Lidl could branch out to. Banking and financial services is also a fast growth MVNO segment. I wouldn’t be surprised if there’s a longer-term strategy there. 

Whatever the future holds, for now they have the ingredients for a highly competitive retail MVNO proposition, and it should prompt other retailers, especially in the UK, to stop and think. 

There are plenty of brands with the scale, loyal customer base and infrastructure to make a retail MVNO work. Morrisons More, Boots and its Advantage card, and the various Co-operative groups, spring to mind as contenders. Even Sainsbury’s, despite the previous exit of Mobile by Sainsbury’s, could revisit the opportunity, particularly given the strength of the Nectar scheme today. 

Given the grocery market is so competitive and the challenger brands are not only taking share and winning the price wars but now sharpening their focus on growth through MVNOs, it would seem fool hardy for other retailers to be complacent.  

In my view, this will spark the next wave of retail MVNOs. Because when one retailer moves, others follow. 

20 years ago, retail MVNOs felt like a risk. Why would a brand take money from the business to invest in an unproven model, when you could build another store, refurbish one to add new product line or even buy a competitor?

But now the numbers stack up. The model is proven, with global success stories and strong underlying economics. We talk about their merit every year at MVNOs World because they work. Not only that, MVNOs work hard for their parent brands. 

For retailers sitting on the sidelines, the question isn’t whether this model works. It’s whether they can afford not to be part of the next generation of retail MVNOs. Those that dally, genuinely risk losing out to competitors on both customer numbers and incremental revenue.

So, if you want to be part of the new era but need help with the proposition, the business case, technology choices, or wholesale contract, then Graystone Strategy can help. Our team have negotiated and launched many successful retail MVNO and are perfectly placed to get your strategy off the ground. To get in touch click here.

You can also book a face-to-face meeting with us at MVNOs World, June 1-3^rd in Amsterdam here.

The post Could the Lidl 1GLOBAL MVNO announcement signal a new wave of retail MVNO growth in Europe?  appeared first on Graystone Strategy.

As stories go, this is significant for the market and indicates the growth potential of operator sub-brands and MVNOs right now, even in a busy market like the UK’s. 

BT ditched an excellent multi-brand strategy

BT has been here before. At peak success, the stable included BT, EE, and Plusnet. The three brands represented three distinct opportunities to acquire more ‘traditional’ consumers (BT), to the more edgy and young (EE), to those prepared to go with a market challenger (Plusnet). But after a brand review last year EE became the lead consumer brand for fixed and mobile and Plusnet lost mobile from it’s portfolio.

The original multi-brand strategy worked as BT, EE and Plusnet not only reached high numbers of consumers across different segments, but they also supported a multi-play strategy of fixed, broadband and mobile, something the other operator sub-brands such as SMARTY, giffgaff and Voxi could not offer at the time.

But as we know, things change, resulting in BT walking away from a multi-play, multi-brand strategy and losing its low cost mobile offer in doing so.

Time for a rethink

This week’s news indicates times have changed again, and a sizable rethink is going on. BT’s hand is somewhat forced as successful MVNOs and sub-brands reign strong, especially in the value end of the sector.

The driving question is: how will BT tap into the ‘value’ space and compete against sub-brands like SMARTY, giffgaff, Talkmobile and Voxi? It’s done it before with Plusnet, afterall. 

These challengers are all winning share, alongside MVNOs like Tesco, iD Mobile, and Lebara – none of which are on the BT network. Not to mention Sky, which has a great multi-play offer in the market.

Top of the strategic imperatives is to establish if BT should build or buy. 

Acquiring an MVNO with brand recognition, established infrastructure and customers, will be very appealing to get the job done quickly. But why go down that route when you could build a sub-brand with your own infrastructure? 

Let’s look at the pros and cons of both.

Setting up a sub-brand is common practice today. UK examples include Voxi, SMARTY, giffgaff and Talk Mobile but the phenomena is established throughout mature markets.  

It allows you to choose and build a proposition that is 100% complementary to your other brands. It allows you to have total control and leverage some of your network economies of scale.

BUT it takes time to set up, comes with the hefty costs of developing and launching a brand, and, if you seek to leverage too much of the existing ‘masterbrand’ infrastructure, or the skills working within the masterbrand, you can start to stifle the entrepreneurial spirit that a successful sub-brand needs.

Stepping back to a time when sub-brands weren’t a thing, operators only had the option of wholesale deals to find complementary MVNO partners that allowed the MNO to indirectly take share of a customer segment they could not address with the masterbrand.

The alternative approach has always been to find MVNOs which will address segments where the operator masterbrand is not strong. This allows the operator to indirectly target the segments through the MVNO and take their value through wholesale revenues.

But, and it’s a big but, operators don’t control the brand, it comes without the full retail revenues or customer ownership and they don’t set the proposition or pricing. This can be uncomfortable to mobile network operators, because without a level of control it’s hard to stop the MVNO drifting into your lane, and risk no longer being complementary.

Buy an established brand or a fledgling?

The speculation that an acquisition is in the offing, suggests BT has done its homework on all of this and has arrived at a crossroads – a) ‘buy’ an established brand with a large base and then supercharge the operations with MNO capital or b) buy a brand based on its potential. 

We have seen this done in France and Spain extensively over the last few years with a host of operators buying up and integrating MVNOs into a multi-brand portfolio.

BT obviously has significant financial resources so has options. I expect the board will first investigate an acquisition from within its existing wholesale portfolio. These MVNOs are already integrated into BT and the majority of BT’s portfolio (except Lyca) are light MVNOs meaning no SIM swap, and potential customer churn, should BT acquire them.

So what are immediate the options to acquire? It’s a very short list:

• Utility Warehouse offers a good base, a very unique and sticky low cost offer and it’s multi-play. But this presents a bigger question: would BT want to buy the whole business – gas and energy etc too?

• There’s 1p Mobile, the spin off from Utility Warehouse. It’s low cost but would it feel like a credible competitor to SMARTY, Voxi etc?

• Lyca is probably the organisation with the most subscribers and therefore appears a good prospect. BT Wholesale lured the brand away from O2 and it could make sense to go a step further given it’s already hosted on its own infrastructure.

However, BT might not consider it an optimal partner in that Lyca’s heritage is in the low cost international markets not domestic. 

Although Lebara has successfully proven moving from low cost international to a value brand can be done, it’s taken a long time and BT may not have the appetite to commit to a lengthy process with Lyca. There’s also the risk that any acquisition would inherit the long running HMRC dispute.

• Spusu may be an option. Low cost and already doing well against the SMARTY-style brands on Uswitch comparison tables. It signed with BT in 2023 and uses BT infrastructure, and, although an international operation, it may consider spinning off a brand in the UK.

• And then there is the relatively new wild card, Slice. It’s a sub-brand run by Lyca on an existing BT wholesale deal. It boasts a unique proposition and has an excellent user experience. I am a customer myself, albeit only as a back up SIM, but if I was buying for capability then Slice is where I would start my conversations. 

It also has the advantage that the CMA probably wouldn’t scrutinize a purchase too much, given the relatively low customer numbers involved. And let’s be frank, who would have the energy for another protracted merger discussion….

• If I wanted to be wild, I could suggest that with BT’s financial assets they could go BIG and buy on the scale of Revolut, taking the brand into a whole new area. 

This is of course huge speculation on my part. I have no inside track on any of the ideas I’ve mentioned. 

But, it’s got you thinking, hasn’t it? And that’s why I love telecoms. There is always something exciting going on. As ever, we’ll need to watch, listen and learn. 

Need help with your MVNO strategy. Talk to the experts. My team knows the industry inside out and can help you look at the options.

The post BT’s in the market for a low cost brand. What are the acquisition options? appeared first on Graystone Strategy.