From the explosive growth of travel eSIM services to retailers such as Lidl exploring the launch of up to 30 MVNOs across Europe with 1GLOBAL, and digital-first brands like Monzo and Klarna reportedly considering market entry, the future looks bright.

Latest market data reinforces the optimism. Prescient Strategic Insight predicts the global MVNO market will grow from a value of $92 billion today to $155 billion within the next three years. These figures highlight not only the scale of the opportunity but also the pace of innovation and entrepreneurial ambition that continues to drive the industry forward.

Regulators play a significant role

A significant factor behind this expansion is the role regulators are playing in fostering competition and encouraging innovation.

In developing telecommunications markets, where greater consumer choice is needed, regulators are increasingly issuing licences and mandating wholesale network access. 

These measures help create opportunities for new entrants while challenging incumbent operators to sharpen up their efforts and deliver better services, lower prices, and more innovation.

The same trend is evident in mature markets. As network operators continue to consolidate through mergers and acquisitions, regulators frequently look to MVNOs as a mechanism for preserving competition. 

Across several European markets, regulatory remedies have included mandatory MVNO access agreements and, in some cases, regulated wholesale commercial terms. Regulators understand that a well-executed challenger MVNO can transform market dynamics and deliver significant value to consumers.

A compelling example is Walmart’s Bait in Mexico. By leveraging its extensive retail footprint and integrating mobile services with customer loyalty programmes, incentives, and promotions, Bait has achieved an impressive 18% market share. Remarkably, it has surpassed two established mobile network operators in the process. This demonstrates the power of combining a strong brand, customer access, and a differentiated proposition.

Innovation is also emerging in other areas. Honest Mobile, for example, has addressed one of the most persistent frustrations faced by UK consumers: inconsistent network coverage. 

Its solution allows customers to access multiple networks through a single SIM, providing greater reliability and flexibility. It is a simple yet highly effective response to a real consumer problem.

Beyond consumer-focused offerings, there are numerous success stories in the enterprise sector. MVNOs are increasingly being developed to support innovations in IoT, connected devices, and wearable technology. These specialised providers demonstrate that MVNOs can take many forms, serving a wide range of customer needs and business models.

But what unites these success stories is a shared mindset. A belief that existing solutions can be improved. By identifying genuine market gaps and delivering something better, many MVNOs have managed to challenge incumbents and reshape customer expectations.

But you need more than a good idea to succeed

However, having a strong concept is only the beginning. While innovation is essential, it is far from the only ingredient required for success.

Launching an MVNO is a complex undertaking that involves significant commercial, operational, and technical challenges. Successful providers invest heavily in understanding customer behaviour, negotiating competitive wholesale agreements, and designing robust technical architectures capable of delivering on their promises. None of this happens by accident.

The challenges do not end once the service launches. Attracting customers and maintaining momentum in the market requires continuous effort. The idea that simply building a product guarantees customers will come is one of the biggest misconceptions in the industry. Successful MVNOs are restless when it comes to keeping their brand visible, relevant, and compelling.

Travel eSIM opens a new world of MVNO

One of the most exciting growth areas is undoubtedly the travel eSIM market.

Travel eSIM propositions are now being adopted across travel, transportation, retail, and fintech sectors. Their appeal is straightforward: they provide international travellers with simple, affordable connectivity while eliminating expensive roaming charges.

Consumers increasingly view connectivity as an essential travel product, purchased as easily as hire cars or sangria. Travellers actively compare providers and seek the best value, creating opportunities for brands that can deliver attractive, easy-to-understand offers.

The most successful propositions often combine connectivity with complementary travel services. Bundling eSIM packages with competitive foreign exchange rates, digital wallets, or airline bookings creates a seamless customer experience that adds genuine value.

Perhaps more importantly, travel eSIMs serve as an ideal gateway product. They offer new entrants a relatively low-risk route into the telecommunications market while solving a clearly defined customer pain point. 

Once a brand has established trust and demonstrated that customers are willing to buy connectivity services from them, it creates opportunities to expand into more sophisticated primary SIM offerings.

This phased approach enables brands to build customer relationships, refine their propositions, and gradually increase lifetime value. It is a model that we strongly advocate and one that many of our clients are successfully pursuing. 

Even traditional mobile network operators are increasingly investing in travel eSIM solutions, further highlighting the strategic importance of this segment.

Being a winner takes time and energy

For every successful MVNO, there are numerous examples of businesses that failed because they focused on the idea rather than the execution.

Success requires strategic clarity, dedicated resources, and expert guidance throughout the development process. The most important question any prospective MVNO must answer is simple: Why would customers choose our service?

The strongest MVNOs succeed because they solve a genuine customer problem and clearly communicate how their solution differs from existing alternatives.

At Graystone Strategy, we encourage new MVNOs to follow a five-part structured development journey that begins with customer needs and user experience. Without a deep understanding of customer motivations, there is no viable business case. It becomes impossible to accurately forecast costs, margins, growth potential, or operational requirements.

Equally important, operators are unlikely to engage in meaningful wholesale discussions if the strategic foundations are weak. Network operators receive countless partnership proposals, and only those supported by clear commercial logic and market demand stand out.

The subsequent stages we recommend focus on technical delivery and operational execution. While technology is often the most visible aspect of an MVNO launch, it should never overshadow the customer proposition. The best technical solutions are often those that create the simplest and most seamless user experiences.

Always be selling

Finally, long-term success depends on sustaining brand relevance and continuously acquiring customers. Too many businesses underestimate the ongoing investment required to market and grow their proposition. Building awareness and maintaining momentum should never be an afterthought.

This is where expert advice can make all the difference. If you believe you have identified a market opportunity, engage with industry specialists early. Validate the concept, build the business case, and refine the strategy before entering negotiations.

Better still, bring experienced advisors into wholesale discussions and contract negotiations. Their expertise can significantly accelerate the journey to market and improve commercial outcomes. In a sector growing as rapidly as MVNOs, that investment could ultimately determine whether you become part of the industry’s success story or simply another example of what happens when opportunity is not matched by execution.Need help ensuring your idea doesn’t fade after launch? We can help, either with our detailed masterclasses on the steps you need to take, or by becoming an extension of your team, developing go-to-market strategy and proposition development. Contact us to find out more.

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It is never an easy question to answer. Wholesale contracts are complex documents covering everything from commercial terms and service levels to customer support, billing arrangements, and regulatory obligations. There is rarely one clause that outweighs all others.

However, if I were compiling a list of the five most important clauses then one covering network and technology parity would undoubtedly be near the top.

Technology parity ensures that an MVNO can access the same network developments, upgrades, and future technologies as the host mobile network operator (MNO). In practical terms, it prevents MVNOs from becoming second-class providers operating on outdated technology while their host networks move ahead.

More importantly, parity provides a foundation for fair competition. It allows MVNOs to build propositions, customer experiences, and brands based on consistent service quality rather than constantly trying to explain why their offering lacks capabilities available elsewhere in the market.

As the industry enters a new phase of innovation, that protection has never been more important.

The growing momentum behind direct to device satellite communications (D2D) demonstrates exactly why technology parity matters.

Right now, we are seeing operators investing heavily in technologies designed to extend connectivity beyond the reach of traditional mobile networks. Direct satellite connectivity promises to deliver mobile services in remote locations, rural communities, vast landscapes and seas.

That’s why telecommunications authorities around the world are evaluating how satellite and terrestrial networks can coexist while protecting existing spectrum users and ensuring public safety.

In the UK, Ofcom has taken significant steps by authorising the use of mobile spectrum to support direct satellite-to-mobile services and also outlining the conditions under which those services can operate. Companies deploying satellite connectivity will be expected to implement measures that protect airspace operations and other critical services while delivering enhanced coverage to consumers.

Initially, many of these offerings are expected to focus on emergency communications and lightweight data services in locations where conventional mobile coverage is unavailable. For rural communities and travellers, that could represent a major step forward in connectivity.

Regulation creates opportunity

These developments highlight an important reality in telecommunications. Technology companies may drive innovation, but regulators remain the gatekeepers.

No matter how advanced a technology may be, it cannot achieve commercial scale until regulatory frameworks are established and market access becomes possible. Once those frameworks are in place, however, the flood gates open and we should expect the pace of adoption to accelerate remarkably quickly.

We are already seeing evidence of this across multiple markets.

In the United States, T-Mobile has been actively developing its satellite connectivity proposition. In the UK, Virgin Media O2 has begun promoting its satellite-enabled services following its agreement with Starlink. Vodafone has also announced customer trials scheduled for 2026 through its partnership with AST SpaceMobile.

Meanwhile, Deutsche Telekom has outlined ambitions to move beyond basic emergency connectivity and launch fully integrated data, voice, and video services via satellite by 2028.

Taken together, these announcements demonstrate not only the speed of innovation but also the scale of transformation that could occur over the next few years as regulators make their moves. 

Why MVNOs must pay attention

For MVNOs, the key takeaway is simple. The race has already started, and you need to be ready for when regulators fire the starting pistol in your jurisdiction. 

Not only that, as new technologies become commercially available, customers will increasingly expect access to them. As we know, connectivity innovations that initially appear niche often become mainstream far more quickly than anticipated – look at eSIM.

The challenge for MVNOs is to ensure the terms of their wholesale agreements support their next move.

If technology parity is already in place, gaining access to new capabilities can be relatively straightforward. If they are not, MVNOs may find themselves negotiating from the back foot and may need to secure entirely new agreements with their host networks or explore direct commercial arrangements with satellite providers. 

Negotiating direct, is of course an option, but as is often the case it’s often more time-consuming, more complex, and more expensive.

In many cases, the most practical first step is to engage with your host operator and explore opportunities for access. Wholesale partnerships are built on commercial relationships, and discussions are always worth having.

However, MVNOs should recognise that satellite-enabled services are likely to be viewed as premium products. Host operators and technology partners will be looking carefully at distribution strategies and selecting partners capable of bringing meaningful value to the market and recovering the investment they make.

Access alone is unlikely to be enough. MVNOs will need a compelling proposition and a clear plan for commercial success.

Understanding what parity really means

One common misconception is that technology parity guarantees identical commercial treatment. Never lose sight of the fact that parity and pricing are two very different things.

A technology parity clause is typically designed to ensure that an MVNO can access the same products, services, and technological advancements available to the host operator’s own customers. It does not guarantee is identical wholesale pricing.

In my experience, even where parity exists, there will almost always be separate commercial negotiations around wholesale costs. The introduction of new technologies often creates additional investment requirements, and operators will naturally seek to recover those costs too.

As a result, MVNOs must carefully assess the economics of any new service. Can the technology solve a meaningful customer problem? Does it create sufficient value to justify a premium price? Will customers be willing to pay for it? Can the proposition generate sustainable margins?

These questions remain just as important as securing access itself. And you must answer them for your business and be ready to give the answers to your host too.

Building contracts that grow with you

Perhaps the most important lesson here for MVNOs, is the need to think beyond today’s requirements. Many wholesale agreements run for five to ten years. In an industry evolving as quickly as telecommunications, five years can feel like an eternity. Technologies that seem experimental today, like satellite, will become standard. 

That is why wholesale agreements should not simply address current needs. They should provide protection against future uncertainty. Whether the issue is satellite connectivity, network upgrades, pricing changes, or entirely new categories of digital services, the principle remains the same. MVNOs must ensure they can remain relevant and competitive throughout the life of the agreement.

That’s why I continue to beat the drum on market parity, because those that fail to plan a contract around future developments risk being left behind.

That’s why we’re here to help. We can deliver masterclasses so you know how to negotiate effectively, or we can step into negotations for you and get the clauses you need to future proof your strategy. Talk to us today. 

The post Technology parity is a must for MVNOs today, here’s why. appeared first on Graystone Strategy.

The global MVNO market is currently worth around $95 billion and by 2035 it’s expected to grow to well over $190 billion. Staggering as these numbers are, I don’t believe they are hype.  

Growth is coming from across the world in both emerging and mature markets. 

In Latin America, Africa, Southeast Asia digital-first propositions enabled by ‘MVNO-in-a-box’ and SaaS solutions are creating opportunities for new entrants in emerging markets. 

Growth in the mature markets of Europe and North America is coming from enterprise IoT, targeted consumer propositions, and the fascinating trend of using mobile not just as a revenue stream, but as a critical part of the strategy to deepen loyalty with existing customers.

Just last month, Lidl and 1GLOBAL announced a partnership that will see the supermarket chain become an MVNO in up to 30 markets, embedding eSIM plans directly into its Lidl Plus loyalty app, which already has over 100 million users.

Then there’s Bait, Walmart’s MVNO in Mexico, proving the power of a focused strategy. It ended 2025 with 26.4 million active users, up 44% in a single year, adding 8.1 million subscribers, net.  

Bait has achieved this incredible growth by deeply integrating mobile into the Walmart retail experience. It’s a simple and effective proposition giving people free data with in-store purchases, supported by activation across 3,000 outlets. 

The results speak for themselves. Bait customers spend two and a half times more in Walmex stores than a non-customer. That statistic alone tells you everything about why retail and mobile are such powerful allies and how mobile has become a critical element to numerous brands’ growth strategies.

Neo-bank MVNOs are also gaining serious momentum. Revolut, Lendable, N26, Monzo, to name a few, are weaving mobile into their financial services ecosystems. 

And in the community space we have seen everyone from influencers to US presidents, sports clubs to religious groups embrace the MVNO model.

But the conference is not just a celebration of growth. It is a place where we interrogate the hard questions too, and this year there will be three critical themes. 

THEME ONE: THE SATELLITE QUESTION – OPPORTUNITY, RISK, OR INDUSTRY EARTHQUAKE?

Let me start with the one I think carries the biggest long-term strategic implications: Satellite.

In March, at Mobile World Congress in Barcelona, SpaceX took to the stage to unveil Starlink Mobile, its direct-to-device service. This followed T-Mobile’s launch of T-Satellite, in partnership with SpaceX, in 20025 with plans for next generation ‘V2 satellites’, targeting 5G-class speeds from orbit, in 2027.

Amazon is also getting in on the action with Amazon Leo, a low-Earth orbit broadband constellation targeting over 3,200 satellites. It’s currently working on partnerships to monetise this new asset. I don’t think Amazon will dabble in this market. It will dive in hard with every intention of disrupting the market by building a global network, just as they’ve done in retail, cloud computing, entertainment and logistics. 

So, at conference we’ll ask at what point does satellite connectivity starts to replace the mobile infrastructure of today. 

We have already seen WIFI take share of customers use in the home. Will we see satellite connectivity also taking traffic away from traditional networks, and if so, will they do it in partnership with operators or in competition with them?

This won’t happen today but it’s a question we need to be ready to answer. Experts agree that physics and economics make satellite a complementary technology to terrestrial networks at present, but V2 satellites promise one hundred times more data density than V1 and that is a whole new ball game. 

If satellite becomes an alternative provider, then the asset that operators have spent decades and tens of billions building and that MVNOs rely on could become redundant, or at least less crucial in some areas.

This brings risk and opportunity. On the risk side, Starlink’s current T-Mobile partnership explicitly excludes MVNO access, and we may well see this approach adopted more broadly.

If satellite capabilities are locked within operator brands, then MVNOs could find themselves excluded from a major new technology wave, exactly the scenario we at Graystone Strategy advise clients to contract against. 

Parity of access clauses in your wholesale agreement are not a nice-to-have; in a world of rapidly evolving technologies, they are protection against a very real threat.

On the opportunity side, this trend has the potential to significantly re-write how consumers access mobile telecoms. We could even see a world where every telecoms brand is an MVNO accessing connectivity from national radio network and satellite combined.

That type of shift needs innovative thinkers that can rip up the rule book and start again. That type of thinking is present at MVNOs World. As a community we are world champions at challenging the status quo and doing things differently.

THEME TWO: CONSOLIDATION – THE DOUBLE-EDGED SWORD

Europe’s mobile network operators have been pushing hard for permission to consolidate. They are being successful and generally, that’s bad for MVNOs as fewer operators means fewer potential wholesale partners. And less competition in wholesale almost always means higher prices and less favourable terms. 

But – and this is the critical counter-narrative – consolidation historically comes with regulatory remedies which are an important catalyst for MVNO growth. We have seen a range of remedy models deployed in the UK, Ireland, Austria and even the Channel Islands, all seeking to drive consumer competition through MVNOs.

We’ve also seen a more radical solution deployed in Mexico. The Red Compartida (Altan Redes) was effectively born from the need to inject wholesale competition into a market dominated by Telcel. Today, 83 MVNOs use that network, and it’s worth noting Bait built its entire 26-million subscriber empire on it. 

We’ll discuss in detail how MVNOs can manage these changing dynamics and refine strategy to ensure opportunity is maximised and the risks are minimised. 

THEME THREE: CHANGING CONSUMER HABITS – THE MARGIN SQUEEZE AND THE PROPOSITION OPPORTUNITY

The third theme is about how consumers are using their phones, from the changing use cases, technologies and attitudes to mobile, to the economics of mobile data.

Let me start with the economics. Data usage is going up. In 2025, 93% of operators globally saw growth in data usage per subscription. 

But here is the problem, ARPU is not keeping pace. Across all markets, we are seeing a growing gap between the cost of serving that data and the revenue earned from doing so. 

The result is a margin squeeze that is hitting MVNOs particularly hard, because MVNOs have the added layer of a wholesale cost they cannot fully control.

There are broadly two responses to the margin squeeze. The first is using tech to reduce operational costs. AI has a huge role to play here supporting a less costs more margin approach. 

The second, and in my view the more interesting, is the race to build propositions that escape the commodity trap entirely and grow value.

Which brings me to the second dimension of changing consumer habits, the social and cultural shift that is creating entirely new proposition opportunities for this industry.

Across the world, parents, governments and regulators are waking up to the impact of uncontrolled social media access by children. Australia has legislated a ban on social media for under-16s, and many more countries are putting this issue under the microscope.

This is not just a policy trend. It is a consumer behaviour shift. More parents are actively looking for technology solutions that keep their children connected AND protected.

They want their kids to have a phone, but not a portal to unregulated content. They want to give independence while maintaining visibility, and they are willing to pay a premium for that reassurance.

Spacetalk, an Australian MVNO and technology company, has created a proposition purpose-built for families offering child tracking, check ins and full parental content controls. 

This allows kids freedom, but within parental guardrails, making parenting in this digital age just a little less stressful. Spacetalk is pursuing white label deals on its technology, already securing one with Vodafone Australia. For pioneering MVNOs, there’s a huge opportunity to seize on this openness to partnership. Done well it has the potential to overcome the ARPU squeeze. 

The trick MVNOs need to take from this is not to compete on price for the same generic data plan but identify a segment with a specific pain point and build a proposition so differentiated that price becomes secondary to value. 

It’s also a reminder that cost cutting isn’t always the way to go and building customer relationships is. 

So, there you have it three themes for congress, and as we’ll no doubt discuss, endless possibilities for success. 

If you would like to discuss how you adapt your MVNO’s strategy to address one or more of these themes then drop us a line, we’re happy to meet for a coffee during the conference, or a video call afterwards. 

The post Satellite, consolidation and ARPU – the hot topics at this year’s MVNOs World appeared first on Graystone Strategy.

If you’re at the Congress and fancy a coffee or a beer, drop us a line.

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For telcos, the value is bigger than an app.

Spacetalk creates daily branded engagement, turns one subscriber relationship into a household relationship, and gives operators new ways to understand, retain and grow family customers.

That means richer household insight, more relevant next-best-actions, lower-cost acquisition opportunities, and new revenue paths across mobile plans, broadband, devices, smartwatch connectivity and premium app subscriptions.

Spacetalk’s MOU with TPG Telecom is progressing to contract for deployment of the platform to Vodafone Australia’s 2.8 million post-paid customers — an important signal that family safety can move from consumer feature to operator growth engine.

The UK timing is strong. The Online Safety Act is in force, the under-16s social media debate is intensifying, and parents are looking for practical tools that help them protect their children without simply removing the benefits of mobile technology.

If you lead consumer, digital, CVM, marketing or commercial at a UK MNO or MVNO, and the family segment is on your agenda, drop me a line.

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Revenue is vanity, margin is sanity.It’s an old adage, but one that holds true for the MVNO Market.

When we speak to MVNOs, they can often think the garden looks rosy. They are growing customer numbers, share and the total revenue metrics are good. But look a little closer and it soon becomes apparent that margins are under acute pressure. Just about every established MVNO I talk to are trying to overcome the squeeze and it’s moving higher up the priority list.

The post Margin Under Pressure: How Mature MVNOs Stay Profitable and Keep Growing appeared first on Graystone Strategy.

VNOs WorldHere’s a stat to make you sit up and think: Prescient Strategic Insight’s latest research indicated that the MVNO market will reach a staggering $155 billion valuation, up from roughly $92 billion valuation today.

The post From idea to MVNO: A practical launchpad for new entrants appeared first on Graystone Strategy.

Yet, for employees there will be uncertainty. Having worked in both companies over the years, it’s fair to say that bringing together two diverse cultures will be a significant task for the leadership team. For the merger to work, people will need to be at the heart of the discussion. 

Reducing duplication

That will bring about a debate on skills needed today and how it must bend as the new company goes through various transitions. What does the HR strategy look like for a new company of this size and nature, and what resource is needed to suit the future strategic direction? 

We’ll learn more about this as the broader strategy unfolds, but there can be no doubt that successful delivery will be underpinned by the mammoth network integration and rationalisation. After all, this was the prevailing case for a merger; if the UK wants to lead on connectivity then this must happen. 

Technical integrations of this scale take years. However, everything that hangs off the network must also be consolidated. There will be no luxury in having two of everything – two CRMs, two brand agencies, two BSS. The list is endless. Expect a scrap between the suppliers vying for strategic partner status. 

In the short-term, employees will welcome the job security that will come from managing the process of reducing everything by half. But – and it pains me every time I write this – jobs will go as the process kicks in. 

Three will fade

Getting back to the real basics of a brand, Vodafone’s  has much more equity than Three’s and ratings by the likes of Which? show how far behind Three is. It’s always been my hunch and it remains so now that I’ve seen the new logo, that the Three brand will eventually be dropped and making it easy to revert to a singular brand identity. I’m not a brand expert but I can’t see how a 51% stake in favour of Vodafone plays out any other way. VodafoneThree will be intent on making every ‘synergy’ it can for the ‘new normal’ and that includes the brand. (Buzzword bingo at its best.)  

Wholesale reviews

At a wholesale level, the remedies are now in full swing, so there will be some frenetic energy in the market. I suspect the wholesale team will be inundated with requests as every MVNO takes a look at what there is to gain. And, depending on the scale of the commercial requests, commercial aggregators like Gamma, eSIM Go and Gigs will be asked to step in. Good news for that side of the market. 

But what of the customer? 

Isn’t this all about them? Customers won’t care about any of the above so long as they get good value and service. 

They might start to care more about the impact of the merger when store closures are announced as the retail estate is thinned, or the inevitable network outages happen as a consequence of the integration projects. There’s just no way of avoiding interruptions to service that the aspects of bringing together large organisations will cause. 

There could be a bit of immediate friction too. Higher value Vodafone customers might balk when they realise former Three customers get ‘all you can eat unlimited deals’ for a fraction of the price. It will be interesting to observe how they handle this. 

What’s the right course of action for MVNOs?

1. Request reference commercials – This requires a written request, signing an NDA and, if you are a new company, a convincing pitch to VodafoneThree that you will deliver scale.
2. Review propositions – Can you do something new to target customers who question the validity of staying a VodafoneThree customer? Should your plan be to anticipate outages and seize on the chance to swoop in? 
3. Review your three year strategy – I would expect VodafoneThree to have very specific remedy and post remedy strategies so be warned. Discuss your options now, not when there’s a surprise change. 
4. Use your clout – If you are an MVNO on either Vodafone or Three building and protecting a base you have commercial clout post remedies. Turn this to your advantage and do the analysis to determine if your current wholesale offer is better than taking the remedy offer.
5. Think about your talent pipeline – There will be some great people, with huge experience and knowledge coming into the jobs market. Think about how you can scale with them onboard. 

If you want help running analysis of your commercial terms and how making adjustments could help you grow your business more quickly, then get in touch. We’re here to help. 

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But, in gathering reaction from leaders across the market, I can see that several clauses in Friday’s CMA announcement rattled a few cages.

For instance, if you take this paragraph at face value, you could conclude it’s game over:

“may be expected to result in a substantial lessening of competition (SLC) in two markets in the UK. These are the supply of retail mobile telecommunications services to end customers, including both consumers and business customers (the retail market), and the supply of wholesale mobile telecommunications services (the wholesale market). “

In truth, there is nothing new here – it’s the CMA’s remit to explore this aspect of a merger.

The same is true for this clause – it’s not a new concern.

“The Merger would reduce the number of MNOs from four to three, making it more difficult for independent MVNOs to secure competitive terms, restricting their ability to offer the best deals to retail customers. This is important because many MVNOs price aggressively, often focusing on value segments of the retail market.”

It’s true, MVNOs who are usually challengers and price leaders could experience wholesale price increases and hence be unable to drive competition. But if contracts have been drawn according to what I believe to be best practice, and would always recommend, there will be some price protection and the option to renegotiate periodically. If wholesale prices went up, then of course, over time we should expect retail prices to rise too. But there are ways to remedy both challenges, which I’ll get on to.

“Most consumers also told us that they would not be willing to pay more for better quality. We therefore have significant concerns about the impact of the Merger on the large number of consumers who might have to pay more for improvements in network quality they do not value.”

I’m sure if you were asked if you want to pay a premium for quality, you’d be reticent.

But let’s be pragmatic for a moment. If it was a wholly price-based decision, wouldn’t Three as the cheapest mobile operator have the most customers in the UK market? There is clearly a difference between what consumers say and what they do, and I think the JV will push back on that.

It’s this paragraph that reveals the nitty gritty of the debate and indicates that compromise and negotiation are options. The CMA is willing to consider remedies that the two parties want to put forward.

“We are also consulting on potential solutions to our competition concerns. These include legally binding investment commitments overseen by the sector regulator, Ofcom, and measures to protect both retail customers and customers in the wholesale market. We will retain the option to prohibit the Merger should we conclude that other remedy options will not address our competition concerns effectively. In our notice of possible remedies, published alongside our Provisional Findings, we have set out more detail on options to remedy the provisional SLCs.”

If it were me, MVNOs and wholesale remedies would be top of my list. I think they will feature strongly as the parties explore options. But to understand why, we need to look at what else is on the table.

So, what is on the list, and which have merit? 

1. Divestiture, for which there are two directions 

The first is getting one of the parties to divest an asset. The CMA has pretty much suggested that there isn’t a company that could be carved off and could still trade as a separate entity. If we were talking about O2 back when they had proposed a merger with Three, then the Tesco Mobile JV and gifgaff would have been a reasonable candidate for divestiture but there are not really any options between Three and Vodafone.

However, an extremely radical (and highly unlikely) proposal could be to package up all the various sub brands of Voxi, Talkmobile and SMARTY and sell them to a third party which operates them applying MVNO economics.

It’s not as crazy an idea as it might seem, were it not for the relatively low customer numbers involved (probably less than 3million). It’s that which makes it a) difficult to justify a rebalance in the market and b) hard to find a buyer.

The other divestiture available is spectrum assets. There has been lots of talk about this and it is an obvious target. The CMA seem unconvinced that this will significantly alter the competition in the market. The merging parties have been pre-emptive, and if the merger is granted, have agreed with VMO2 (which need spectrum) that it will bring Three into the existing VF/ VMO2 site share agreement.

2. The next remedy is an investment commitment.The CMA needs to be convinced that the parties will make the investments outlined in their plan. If this goes ahead then I think this is almost a given that the CMA will seek to have some sort of binding commitment for this.
3. Retail customer protections is the next.In effect, the merged entity will be expected to honour current offers and pricing in the market for a negotiated period. This was one of the concessions made in the Channel Islands merger that Graystone was involved with, and with that experience to hand, I suspect this is something that can be easily agreed.
4. It’s therefore highly likely there will be a reliance on wholesale and MVNO remedies, with numerous tried and tested options apparent in other markets.

The first is the solution of divesting some spectrum to an MVNO to allow them to become the new fourth market entrant. We have seen this solution applied in Spain recently after the merger between Orange and Mas Movil. In fact, it was only approved subject to MVNO Digi getting access to both spectrum and national roaming agreements so they could become a credible fourth network over time.

How could this work in the UK? It would have to be a full MVNO and not one owned in a JV. So, it couldn’t be Tesco, the most obvious candidate in terms of scale. This therefore limits the options to Sky (most likely) Lycamobile, Lebara or Gamma.

In theory, there’s nothing to stop a credible and financially sound new entrant being created. But not only would that take a significant investment, we also have to remember that the whole premise of the merger is that Three cannot function and make the network investments required to be profitable with 10m customers.

With that as a backdrop, it would be a very brave organisation that takes on the market from nothing. But who knows, maybe Elon Musk, or someone similarly driven and financially able, fancies an adventure in telecoms. Nothing surprises me at the moment…

5. The next MVNO / wholesale related option is capacity ringfencingto allocate spectrum specifically for MVNOs. In the past, there have been two approaches to this. The first, used in Ireland and Austria amongst others, was to ring fence capacity for MVNOs and implement a capacity-based charging model.

In those examples, it was also coupled with bringing in new market entrants to leverage this model. However, it should be noted that those markets did not have such a vibrant MVNO market as the UK. Whilst this model is interesting, it’s my opinion that it typically requires the MVNOs to be full MVNOs, which is capital intensive. Not only that, but there are relatively few in the UK, making it a less viable solution.

A more radical solution, which was deployed in Mexico, was building a network entirely for MVNOs. Wild as it may seem, the same could be achieved using allocated spectrum and a full MVNO infrastructure either owned by a third party or leveraging the merged entities infrastructure (as they will have two of everything!).

This would be like creating the equivalent of Openreach for mobile. So, not such a wild idea as it’s been done before. But I suspect it’s a bridge too far for Three and Vodafone.

6. That leaves us with regulated pricing.On balance, I think this is the more likely option, and fits with the CMA expectations of Wholesale access terms. This could involve pre-agreed non-discriminatory wholesale terms, including prices, being made available to MVNOs, subject to a reasonable limit (number of MVNOs or network capacity utilisation).

This is relatively tried and tested in markets globally. However, the challenge is always how you set those terms. There have been many methodologies deployed in the past and not all have helped MVNOs succeed.

We should also consider that historically in the UK, wholesale deals and pricing have been 100% confidential and, because of this, published wholesale rates could cause a correction in existing wholesale deals.

What would I do? 

No one remedy is the golden arrow, but there are certainly golden threads that the JV parties, and the CMA could look at together. I think that applying scrutiny to the MVNOs and wholesale market is more likely to benefit MVNOs commercially, and therefore consumers, whether it’s a new entrant, or via existing MVNOs.

That’s where I would focus attention initially and it’s why I still think there’s a good chance of this happening. The CMA is stating a position of openness and it’s now up to the parties to come to the table and negotiate.

If this has made you think your business needs a plan fast to react to what will be a significant market event whether it is a yes or a no, then speak to us at Graystone. This is our heartland and we’d only too pleased to work with you on a strategy for success. 

The post Vodafone / Three JV – is the CMA signalling game over? appeared first on Graystone Strategy.

It’s an unstoppable multi-billion-dollar industry and you’ve followed the developments of new licenses around the world. Your analysis shows you that you could make a name for yourself in a burgeoning market.

You’ve got the intel, and the spirit and drive to be successful, but how do you get your idea off the ground quickly?

Ordinarily you’d expect me to say that you should develop a proposition, one that will give a substantial cohort of consumers something different, and compelling, even unexpected. Do the business case and speak to the operators and become an MVNO. It’s a tested model – Deliver a killer go to market strategy and through all means possible drive awareness of your brand and ultimately achieve cut through and customer consideration.

That’s a considerable commitment in time, and cash, even before you’ve started trading. Is it really possible to follow your dream?

Yes, and it can be easier and less costly if you re-evaluate what a brand is. If you set aside the concept of creating a brand, and all the complexities that comes with, but instead focus on the other core elements of running a business then you have a chance.

But a brand is the business I hear you cry. And yes, it is. But you can be a brand without creating your own. Today more and more fledging mobile entrepreneurs are latching on to the merit of licencing a brand.

I bet it’s not something you’ve considered before. It’s an option that has been quietly ticking along in the wings for some time now but came into the spotlight at MVNO World Congress in June, thanks to David Clyde, Brand Director at Lebara.

Lebara is a fascinating MVNO story. It’s now a well-known global MVNO brand, and it stands out because it’s a mobile provider that has proven how it’s possible to adapt a core brand for different markets.

Wherever you travel, the Lebara brand will be recognisable. It’s distinctive logo and uncomplicated offer shine through. Its rapid growth around the world is testament to decisively sticking to its core proposition and knowing its audience.

However, Lebara recognised some time ago that there isn’t a ‘one size fits all’. Brands don’t survive unless they make adjustments for local market conditions, language, and culture.

It’s something that Vodafone have led the way on. The brand team there, understood that a globally recognised and highly valued brand which is usually unwavering in its brand guidelines, needs to flex to accommodate local market nuances without losing the brand essence.

More critically, Vodafone has been highly successful at monetising the brand and what it stood for, by establishing a ‘partner market’ network. With this model, Vodafone allows partner markets to leverage the brand, the propositions, and the insights without technically being an operating company owned by the Vodafone Group. It’s a winning formula – partner without the cost of a network roll out and establish a brand presence in new territories with ‘relative’ ease.

In terms of how you and I experience it, it’s really quite straightforward. When you travel to a Vodafone partner market you may see familiar proposition elements including retail formats that are identical. The brand you trust in the UK is instantly recognisable, and all it stands for comes to mind just being seeing the shop front.

In this case, Vodafone is taking all the best practice, insight and trading experience across retail, proposition, brand, CVM, roaming and so on, and giving partners a way to leverage it all so they can accelerate their own commercial success and what’s more, do it with a standout brand.

It’s with this context in mind, that Lebara’s brand licensing proposition for MVNOs is so interesting. As a budding MVNO you can access a globally recognised brand and customer proposition, with the help of a team who have driven growth for Lebara globally, vastly increasing your chances of success in your chosen market, and probably adding significant credibility for those all so important MNO wholesale discussions.

Is now the time to strike?

Quite possibly.

Lebara has moved quietly and confidently with its strategy, establishing partners in Australia, Switzerland, KSA and Spain. More recently, it announced a partnership in Nigeria with Vas 2 Net, one of the Tier 5 license holders. Vas 2 Net will benefit from an established brand, exec expertise across every discipline and function, and benefit from know-how built from years of hands-on experience. This level of help is undoubtedly invaluable for any new MVNO.

It makes good sense for a start-up MVNO to go this way. As I’ve said, building a brand can be an expensive business both in terms of time and hard financial cost. I know from experience of launching MVNOs in a number of markets. In all cases, we had a trusted brand (Sainsbury’s for instance) and we were simply leveraging the brand values and customer loyalty to move into the mobile space.

For an MVNO starting out with a blank piece of paper and absolutely zero brand awareness or customer consideration, it can’t be overstated how much of a big task it is to make a name for yourself. It takes hefty marketing budgets to gain cut through.

So, why not look at leasing? It’s not just any brand that Lebara is delivering. It’s a well-established and trusted MVNO brand with impeccable smart value credentials, exactly the type of brand that any start up MVNO would aspire to be.

On top of all of that there is the unparalleled knowledge, insight, and experience that MVNOs can tap into, all of which has enormous value.

Of course, it would be naive to think Lebara will work with anyone. Afterall, it has a brand to protect too. Expect it to be highly selective about who it will partner with and steadfast to ensuring every licensee delivers against brand expectations and promises.

Brand licensing won’t be for everyone, in fact start-ups may look at Lebara, Vodafone (and others) and think that they could monetise their efforts with their own licensing strategy. It definitely gives weight to the argument to invest in building brand equity as part of an investment in the future.

With that strategy comes other options too. For instance, you could sell the brand to the MNO to create a sub brand that’s promoted in markets they believe they can grow share in.

My point is, MVNOs have more options for growth than they perhaps realised before. Just as they have a range of choices about their technical strategy and their commercial strategy, they now have some interesting choices on brand and marketing strategy too.

The reception David received at the conference, highlighted the appetite for this diversification. And the questions I was asked subsequently, show how much head scratching is already going on. I’m sure this won’t be a strategy confined to a few markets for very long. Not only should we expect to see more Lebara brand licensees in the future, but I’m certain other big MVNO and/or MNO brands will follow suit in the coming years.

If your head is fizzing with ideas after reading this, then our expert team at Graystone Strategy can help you work through the best approach for you. With over 100 years collective telecoms and MVNO experience spanning technology, operations, commercial and marketing we can help you make the right choices for your MVNO.

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