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CASE STUDIES FROM EUROPE, ASIA, AFRICA AND THE MIDDLE EAST: TYPICAL FAILURES AND SUCCESSES The examples in this section are appropriated to enable an understanding of the different circumstances under which MVNOs have been started in the past. The case studies in each region are examined for the regulatory framework, market conditions, entry strategy, challenges and operational successes under which the MVNO was started and the current status of the MVNO. The VMSA case is also examined along with the Touba Mobile Senegal to highlight two inherently different markets (South Africa ­ near First World; Senegal ­ Third World) within the African continent. [ See Full Report for More Information ]


Telmore (Denmark, 1 2000)


-High tariffs

-Low tariffs/retailer

Lycamobile (Netherlands, 2 2006)


-Unreached ethnic segment

Virgin Mobile (India, 2008)


-Youth segment

Trident Telecomm


-Convention visitors

-Low international call rates -Services to ethnic customers in their own languages -"Unsubsidized" handsets -Retail -Innovations like free air time for each incoming 4 phone call -Prepaid retail service

-Rapid growth cannibalized established MNO base leading to MNO pressure to buy off MVNO -Identifying partner MNOs in new markets is not easy due to presence of other MVNOs

-Low cost model using, mainly, the web for sales & customer support (used 40 million employees to manage 500,000 customers) -6 million customers -Success in 10 European 3 markets -Large distribution network

-Innovations were not sustainable in 5 the long term

-Simple pricing plans -Excellent customer care -Research driven marketing 6 & demand analysis -Failed to identify willing MNO partner after close of

-Failure to renew agreement with

1 2 3 4 5 Ibid. 6 Copyright 20117 Mind Commerce Page 6 of 16

(Hong Kong, 2002) Current status: closed down Renna Mobile (Oman, 2009)

parent MNO 7 (PCCW)

contract with PCCW.


-Unreached ethnic segment

-Prepaid retail service -Low international calling tariffs -Lowest SMS rates

-Launched within same time space as another MVNO (FriendI) & they compete in the same market segment

-Deployed own provisioning 8 and billing hardware -Various pricing plans thereby increasing choices for subscribers -Extensive retail system (4000 outlets)

Touba Mobile (Senegal, 2011)


-Mass market

-Free MVNO to MVNO calls -Cheap calls to non-MVNO numbers

-Cannibalization of MNO subscribers may lead to conflicts with MNOs

Econet (South Africa, 2009)

-Unrestricted after Carrier pre-select regulation provisions were 11 passed

-Zimbabweans living in South Africa

-Low cost calls to Zimbabwe from South Africa (use of call home SIM cards)

Virgin Mobile (South Africa, 2006)

-Unrestricted after Carrier pre-select regulation provisions were passed into law

-Postpay/higher ARPU bracket -Prepaid cheap & easy pricing both at peak & off-peak times

-Higher income post-pay (contract) subscribers

-Relatively small subscriber base -Little room for expanding VAS since niche market mainly requires cross-border communication services -100 percent market penetration has been achieved & MNOs are shifting their focus to potential post-paid customers increasing competition in VMSA niche 13 segment -Higher interconnection fees to "rival" MNOs may "down-grade" the competitiveness of

-Partnership between two strong, local brands (Sonatel, an Orange affiliate & Kirene, a popular 9 mineral water company) -The name Touba refers to a religious city in Senegal (could be an edge in marketing to devotees of 10 Islam) -500,000 lines in 12 12 months -Loyal customer base

-Leveraging the Virgin brand -Excellent customer care But failed -To achieve desired 10 % market share



9 Middle East MVNO Market Analysis (2010), Mind Commerce Report


11 12


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VMSA's brand

The case studies reveal overall MVNO start-up "principles" that are applicable to the African market: Favorable local market conditions as revealed by the presence of unrestricted legislation or provisions, a niche market and low market penetration in the target market must be present. Market entry through low tariffs-retail models must undergo rigorous sustainability due diligence (low tariff models have the low ARPU). A willing, local MNO must be identified for an MVNO to establish good traction. Branding is a core element of MVNO identity establishment. The MVNE concept has not taken root in Africa and the MVNO's business model must be designed in such a way as to work within the parent MNO's infrastructure (i.e. the MVNO cannot innovate beyond the technical capabilities of the parent MNO ­ for example the MVNO cannot offer 3G content when the parent MNO only has a 2G network or limited 3G coverage). In many instances the market share is dominated by a few (two or three) large MNOs and the MVNO must calculate the potential for high interconnection costs for its users' callers to a non-parent MNOs14. MVNO services for 3G frequencies remain largely untapped. [ See Full Report for More Information ]



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