What Does the Future Hold for the MVNO Market?

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Cartesian Ltd. Registered in England and Wales. Registered Number: 03230513Registered Office Address: Descartes House, 8 Gate Street, London WC2A 3HP United Kingdom

Cartesian Perspectives

What Does the Future Hold for the MVNO Market?

January 2012

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Cartesian is a specialist provider of consulting services and managed solutions to the global communications, technology and digital media industries

Company Overview

Offices in Boston, Kansas City, London, New York and Washington

Onsite and offsite delivery models to suit client needs; partner network of ICs, technology providers and SIs

Clients across six continents include communications service providers, technology vendors/OEMs, digital media, financial companies and regulators

Proven understanding of business strategy and client issues

Expert assessments of operations, platforms, and business processes to support corporate strategies

ward-winning technology platform and 20+ years experience deploying solutions for CSPs

Industry specialists, focusing exclusively on communications, technology and digital media

Expert operational know-how and project management skills, with proven methodologies across content areas

Several hundred consultants, averaging 15 years of sector-specific experience

Capabilities

Global Reach

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Our clients are the global leaders in the communications, technology and digital media industries

Example Clients

Mobile Fixed Cable/MSO Satellite Cloud & Hosting

Service ProvidersConsumer Electronics Enterprise Software & Apps

Components Infrastructure Intermediaries Integrators

Technology

Digital Media Automotive Energy HospitalityHealth Insurance Retail

Media & Verticals

Government Regulators Industry Groups Foundations

Influencers

Private Equity & Venture Funds Commercial Lenders

Investors

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We offer end-to-end professional services through strategy development, execution and a suite of managed solutions

Service Portfolio

Growth & Transformation

Market & Competitive Assessment

Go-to-Market Strategy

Corporate Strategic Planning

Deal Development and M&A

Legal & Regulatory Support

Program Management (PMO)

Operational Excellence

Product Design & Launch

OSS/BSS Transformation

Networks & Infrastructure

Business Assurance, Risk, Compliance

Ascertain Platform Solutions

Sales & Marketing Optimization

Customer Lifecycle Management

Device Lifecycle Management

Assurance & Fraud

Network & Provisioning

Business Intelligence

Managed Analytics

Smart Building Solutions

Business Process Outsourcing

Strategy Execution Managed Solutions

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MVNO Expertise

Cartesian has worked on 40+ MVNO projects throughout the US, Europe, the Middle East and Asia

Strategy and business case support including detailed cost and revenue modelling

Negotiation support for contracts and commercial terms

Vendor evaluation and selection, including architecture design

Securing funding

PMO and launch support (e.g. proposition development, distribution, platform deployment)

MVNOs

MNOs

Regulators

Assessment of MVNO policy, regulation and market impact

International regulatory benchmarking and support with preparation of NRAs regulatory licensing framework

Preparing the MVNO business case, drivers and alternative operational and commercial models

Detailed cost and revenue modelling to calculate MVNO / wholesale commercial terms

MVNO and sub-branding strategy including scenario analysis

Cost modelling to determine wholesale pricing

Identification and recruitment of wholesale / MVNO partners

Development of optimal operational and technical architecture

Internal segmentation analysis

Vendor short-list, assessment and selectionConfidential

Retailers

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Context

In Q4 2011, Cartesian conducted research and analysis to understand the state, current and future trends, and likely evolution of the MVNO market

Interviews

Cartesian interviewed a number of key individuals within the MVNO space, including MVNOs, MNO wholesale teams, MVNEs and

MVNAs

Secondary Research

Cartesian conducted secondary web research to capture details on recent MVNO launches, failures and success stories

Thought Leadership

Cartesian drew on its knowledge base and experience from over 40 MVNO projects

We hypothesised trends and validated with research

Outputs

The research and analysis was conducted throughout Q4 2011

Findings were presented at the MVNO Conference in Paris on November 22

This presentation contains the results of our analysis, and focuses on 12 key trends in MVNO: 6 emerging opportunities, and 6 trends impacting the market

Scope of Thought Study

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Key Questions

Throughout this Thought Study, we address the following key questions:

What is the state of the MVNO market today?

What are the emerging MVNO opportunities?

How are commercial and operational models evolving?

What are the emerging MVNO opportunities?

How are commercial and operational models evolving?

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New MVNOs

MVNOs continue to roll out on a weekly basis

Nov 2011

US

$19/month service mandating WiFi offload for calls and internet usage

Oct 2011

Mexico

Complementing Megacables existing triple play offering

Oct 2011

Spain

A low cost service launched by Spanish portal Movilonia and MVNO Ortel Mobile

Oct 2011

Switzerland

Targeting ethnic communities. Already operates in five other European countries

Sep 2011

Austria

Retailing via a network of tobacconists across the country

Sep 2011

Australia

Competitions to Red Bull events and two handsets with a dedicated Facebook button

Sep 2011

Germany

A service provided by an auction TV channel from Germany

Nov 2011

Malaysia

Targeting the youth sector, offering 365-day validity for top ups

Oct 2011

UK

Customers pay upfront for a 1, 3, 6 or 12 month contract

Nov 11

Netherlands

A low cost service launched by Dutch supermarket chain Dirk van den Broek

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Lack of demand

Lack of funding

Regulatory

Lack of demand

Brand Rationalisation

Lack of demand

Not as profitable as core business

MVNO Failures

However, failures still occur for common reasons

Source: Prepaid MVNO, Mobile News, Cartesian

xx

xx

xx

nutshell

hablafacil

xx

xx

Ethnic (youth British Asian market)

Charity / donation

1st MVNO in market, prepaid

Customers with poor credit ratings

Immigrant

Youth

Quad-play

Nov 2010 Sep 2011 (11 months)

Oct 2010 Aug 2011 (11 months)

May 2010 Aug 2011 (16 months)

Mar 2010 May 2011 (15 months)

Mar 2009 Dec 2010 (22 months)

May 2009 Oct 2011 (30 months)

Nov 2010 Mar 2012 (17 months)

Reasons For FailureCountry Description Duration

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MVNO Market Share Worldwide

Market share and growth trends vary significantly by market

Sources: Cartesian, Nereo, company websites, press releases

South America