Written by Guest author 05 September After an in-depth analysis of five telcos from around the world, Ovum found out that most VAS services are offered via daily, weekly, or monthly subscriptions, and in many cases as part of a promotion or bundled with another service. As digital booms across the telecoms industry, the provision of digital content becomes key to those players who want to stay relevant and differentiate themselves through unique services.
Critical Success Of the recently launched MVNOs it is too early to say whether they Factors will ultimately create value for their shareholders. However, reviewing the accounts of Virgin Mobile reveals that where an MVNO can Select the appropriate MVNO network model leverage its brand, customer base and distribution assets effectively the resulting returns on capital employed are impressive — in the case of Virgin outperforming their host networks by a factor of 10!
This is most effectively achieved when the business can leverage existing assets such as existing customers, brand, Select the right network partner distribution, content or infrastructure.
A good business story, whilst essential, is not sufficient to ensure success. The greatest challenge is securing a network deal at a wholesale rate which allows the MVNO to create value for Negotiate the optimum wholesale agreement shareholders.
The chances of negotiating a good deal are significantly enhanced if the underlying business proposition is strong and is presented in a clear, consistent and compelling business plan which is supported by a flexible and detailed Excel based business model.
Put in place world class programme management Even with a strong business case and a favourable wholesale deal the business plan is still nothing more than just a plan.
To create value for investors the plan must be implemented and this requires the careful selection of equipment vendors and world class programme management to ensure successful execution. Once Improve performance on a continuous basis launched the only remaining challenge is to keep pace with the constant change of the telecoms sector!
Competitive advantage is achieved by successful existing assets in MVNOs through effectively leveraging their existing assets to generate customer growth with low customer acquisition costs. Tesco z Brand — to be successful the leveraged brand must drive the purchase of mobile telephony e.
Virgin z Distribution — existing channels to market will help reduce the cost of customer acquisition e. However, assets and selecting Existing fixed line Virgin Media UK declines in traditional fixed line revenues as well as an increasing move towards convergence operator a different position in e.
Some low-cost, no-frill MVNOs have failed Asda Mobile UK due to price competition and this highlights the importance of securing an appropriate network deal and stress testing the business case in an appropriate Excel model. Virgin mobile is probably the most often cited example of a successful branded MVNO.
Advertising supported free mobile services are offered by Blyk. A narrow focus is required to support the advertising based model.
The greater the investment in core network assets the greater the flexibility of the MVNO in terms of tariffs and services but this must be traded-off against the increased capital expenditure and greater critical mass of customers required to deliver a viable return on the investment.
The main fixed cost elements of the MNO are: The main fixed cost elements are relatively small and comprise: It is therefore essential for the MVNO to develop a business model that minimises the cost of customer acquisition and retention as well as fixed costs in order for the business model to be Variable commercially viable.
The roles of the business plan must convince investors and the potential host network that your supporting Excel are as follows: The more convincing the model are essential z Allows the entrepreneurs, founders or sponsoring business to business case the stronger the negotiating position of the MVNO.
A assess whether the creation of an MVNO will create value for the good business plan will have the following characteristics: There are a number of factor that need the chances of This paradox can be explained by appreciating that each individual to be considered when selecting which networks to approach: The case becomes increasingly compelling if you — What revenue and customer growth is the MNO currently have unutilised capacity on your network, you operate in a mature delivering and do they have existing capacity on their network?
The strategies of MNOs customer base? The typical responses of MNOs can be summarised achieve that positioning through the marketing mix? Does the as follows: In addition an Operations Manual must also be prepared. This the financial performance of the business. A business model must ensures the host network cannot reduce their own customer facing include traffic forecasts and wholesale rate assumptions for the prices below the negotiated prices with the MVNO.
Requirements for effective negotiations z on-net The fundamental negotiation strategy of the MVNO must be to tip the z off-net balance of negotiating power in their favour by presenting such a z Fixed compelling business case that the MNO is desperate to secure the whole business.
These functions will in turn determine which core network systems and services are required. The MVNO then faces two critical decisions: Decision criteria In determining how best to answer the questions the MVNO must address and weigh up a number of key issues: Capital expenditure is substituted by increased represents a trade- operational costs to the outsource company which scale up with growth in the customer base and usage.
Outsourcing reduces cash Low Outsource Risk In-house High off between risk, outflows in the short term and shortens the time to cash flow positive.
Outsourcing also typically results in less flexibility over the capabilities of the business and propositions it can offer. In-house Quick Outsource Speed In-house Slow Developing an in-house solution requires more time months before commercial service launch and greater investment as the time to cash flow positive and payback is longer.
The higher levels of investment increase significantly the operational and financial risk of the business. The right design for network and systems, the right choice of suppliers, rigorous implementation, integration and testing are all critical.
Getting any one of these wrong can result in significant time and budget overruns, poor service to customers and greater expense to put things right.
Developing core network capabilities in-house however, offers High In-house Return Outsource Low greater flexibility over the development of innovative products and services and higher potential returns on investment in the long run provided the target number of customers are acquired.This presentation includes “forward-looking statements” within the meaning of the securities laws.
The statements in this presentation regarding agreements the costs and business risks associated with deploying a WiMAX network and offering products and services utilizing WiMAX technology; utilizing a simple and tested MVNO business.
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This presentation contains unaudited and/or proforma financial data; it also includes forward-looking Develop current MVNO proposition and extend to current customers in Q4 Market development Market development 3 Business plan balancing growth and profitability 4 .
MVNO Business Essentials This document has been created by NEREO BUSINESS CONSULTANTS. It is not complete unless supported by the underlying detailed analyses and oral presentation.
MBE - INDEX THE MVNO BUSINESS LAUNCHING A MVNO CONCLUSIONS ABOUT US MBE - 2 THE MVNO BUSINESS What is a MVNO A Mobile Virtual Network Operator (MVNO. This presentation contains forward-looking statements within the meaning of our ability to adequately forecast and plan future network Liberty Global plc | Q3 Investor Call | November 4, 13 VTR and LCPR I On-Track With Solid Growth (1,2).