Addressing the mobile market with the MVNO model. The MVNO can be an attractive model for new and existing players to enter the mobile market and/or to target specific market segments. A thorough market analysis, a careful selection of the most appropriate MVNO model and a continuous effort to maximize operational and cost efficiency are equally important in achieving market success. This presentation provides an introduction to the MVNO model, the international experience, an overview of some interesting MVNO models and SVP Advisors insight and recommendations on the different steps to be taken when launching a new MVNO venture. To access the presentation please follow the link below.

1. ADDRESSING THE MOBILE MARKET WITH
THE MVNO MODEL
SVP ADVISORS
March 2010
RETHINKING│ COMMUNICATIONS

2. Contents
1. About SVP Advisors
2. The MVNO model
3. The international experience
4. Successfully launching an MVNO
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3. SVP Advisors in a snapshot
SVP Advisors is a management consulting
firm, which specialises in Regulation and
Business Strategy in the broad telecoms
sector
SVP Advisors’ clients include:
 Int’l Organizations (EC)
 Regulators (TRA UAE, CITC, CMT,
NITA, EETT, AGCOM, OCECPR)
 Operators (Turkcell, Telecom Italia,
Telefònica)
 Financial Institutions (Citibank,
Banco Santander, Inter Development
Bank)
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4. SVP Advisors’ experience with MVNO
Client Project Description and Objectives
MNO (EE) • Support in drafting wholesale offer for MVNOs
• Development of MVNO pricing model (retail minus, cost plus)
MNO (EE) • Support in definition of MVNO strategy
• Development of a tool to assess the viability of different MVNO models
Private Equity • Review of 2 MVNO business plans
Fund (WE)
• Assessment of investment opportunity
MVNO (WE) • Support in negotiations with host operator
• Development of an internal costing model
MNO (WE) • Support in lobbying with the Regulator against MVNO access obligation
• Mobile market and competition analysis
Regulator (WE) • Mobile market and competition analysis
• Assessment of impact of MVNO entry in the mobile market
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5. SVP Advisors can provide value-added support in different areas
 Assess the MVNO opportunity in new markets
FOR MVNOs
 Develop business case/plans
 Support in negotiations with host networks/MVNEs
 Develop innovative voice and data propositions
 Support in the definition of wholesale and MVNO strategy
FOR MNOs
 Evaluate proposals of candidate MVNOs
 Develop cost-based models to determine wholesale MVNO prices
 Design and implement accounting separation systems
 Mobile market analysis (wholesale/retail)
FOR NRAs
 Assess the impact of MVNOs on market and competition
 Develop bottom-up models to determine MNO’s access costs
 Review regulatory accounts of MNOs
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6. Contents
1. About SVP Advisors
2. The MVNO model
3. The international experience
4. Successfully launching an MVNO
6

7. Definition of MVNO
 Mobile Virtual Network Operators (MVNOs) are companies providing
mobile services to end users without having their own licensed
frequency allocation of radio spectrum
 MVNOs buy radio access (airtime) from Mobile Network Operators
(MNOs) in order to provide calls, SMS, data and other mobile services
 Depending on their type, MVNOs may also lack additional
infrastructure needed to provide mobile services, e.g. OSS/BSS
 Different to MNOs, MVNOs typically have a narrower range of
services/tariffs plans as they focus on a particular market segment
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8. MVNO as a mean to reach different objectives
 The MVNO model can well serve different type of players
• Exploit difference in retail-wholesale prices
1. New Player • Use strong brand to enter a new market
• Exploit existing retail distribution network
• Sell excess network capacity
2. Mobile Network
• Niche products / underserved segments
Operator (MNO)
• Ease regulatory pressure
• Complement offering to existing clients
3. Fixed operator • First low-risk step into mobile
• Counter-attack mobile operators
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9. 1. The MVNO model for a New Player
 Large corporations, small companies or entrepreneurs can use the
MVNO model to reach mobile customers with:
 Simple and cheap tariffs
 New services
 Innovative voice and data propositions
 Cross-promotions (existing activities)
 Examples:
 Supermarket chains distributing prepaid SIMs with cheap traffic
 Banks enhancing their customers’ experience through mobile
 Media brands providing own content directly to end users
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10. 2. The MVNO model for established MNOs
 The MVNO is one of two models available to MNOs to target market
segments (the other being launching sub-brands)
MVNO model Sub-brand model
MVNO develops and retains MNO maintains customer
relationship with customers relationship
MVNO develops its own New brand or use existing
tariffs and (in some cases) strong brand to market the
services services
MNO charges MVNO per MNO generates direct
airtime and use of other revenue streams from
elements of the value chain customers
MNO typically hosts several Different sub-brands used to
MVNOs at a time address niche segments
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11. 3. The MVNO model for fixed operators
 FMC pushes operators to move into each others core businesses
 Fixed operators can effectively enter the mobile market through MVNO
 Quick time-to-market
 Low capex commitment (no license fee, network deployment)
Mobile BB to
minimize F2M
substitution
GSM homezone
4Play to increase solutions to
APRU and reduce bypass fixed
churn network
MVNO
Model
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12. An MVNO type could be defined according to the elements it
controls in the mobile services’ value chain
NETWORK CONTENT & OPERATIONS SALES & MARKETING
INFRASTRUCTURE APPLICATIONS
VAS &
Radio Network SIM Card & Sales & Value
Service Billling Support
Spectrum Switching Provisioning Distribution Proposition
Platform
BRAND
LIGHT
FULL
MVNO OWNS MNO OWNS MVNO MAY OR MAY NOT OWN
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13. Contents
1. About SVP Advisors
2. The MVNO model
3. The international experience
4. Successfully launching an MVNO
13

14. MVNOs presence in the World at a glance
 There are about 500 active MVNOs worldwide (as of March 2010)
 They control an estimated 2% of the total c.4.8bn mobile connections
 Their presence outside WE and the US is still largely underdeveloped
31 MVNOs
72 MVNOs 311 MVNOs
c. 10% share c. 10% share
4 MVNOs
<1% share
27 MVNOs
<1% share
7 MVNOs
<1% share
4 MVNOs
<1% share
42 MVNOs
Note: MNOs’ owned MVNOs and sub-
brands not included in the chart
14 Source: GSMA Wireless Intelligence, Telegeography

15. MVNOs presence in Western Europe
>20% SHARE
NED 10%-19% SHARE SWE
41 MVNO 6%-9% SHARE 7 MVNO
<5% SHARE
BEL FIN
24 MVNO 5 MVNO
UK DEN
28 MVNO 36 MVNO
FRA GER
30 MVNO 65 MVNO
POR AUT
5 MVNO 3 MVNO
SPA ITA
25 MVNO 14 MVNO
15 Source: SVP Advisors estimates, GSMA Wireless Intelligence

16. Overview of MVNO models [1]
MVNO MODELS DESCRIPTION EXAMPLES
Ethnic Targets international communities providing
cheap calls to home countries
Discount “No frills” simple and cheap mobile services
targeting price sensitive customers
Retail Offered by retailers with strong distribution
network targeting the mass market
Telecom Mobile services offered to landiline customers
in addition to existing services
Media/Youth Value added music and video content
targeting young people
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17. Overview of MVNO models [2]
MVNO MODELS DESCRIPTION EXAMPLES
Banking Targets existing customers providing
additional services such as mobile banking
Data MVNOs that provide only mobile data and
broadband access (no voice)
Business Targets corporate customers with tailored
voice and data solutions
Web Offers innovative services e.g. call filtering,
personalised voicemail and online inbox
Advertising Free calls and SMS subsidized by targeted
advertising to subscribers
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18. Current trends in the international MVNO market
 In mature MVNO markets (e.g. Northern Europe) mass market
generic MVNOs are losing ground to niche MVNOs targeting specific
segments or offering innovative services and solutions
 Several MNOs are becoming increasingly active in the MVNO market
 Buying MVNOs hosted in their network (e.g. Sprint-Virgin Mobile)
 Launching sub-brands
 As mobile markets approach maturity and regulation promotes
competition, MVNOs are expected to appear in many new countries
 The market characteristics, the business initiative and the strategy
of MNOs will drive the process in each country
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19. Contents
1. About SVP Advisors
2. The MVNO model
3. The international experience
4. Successfully launching an MVNO
19

20. The different phases of an MVNO launch
1. Selecting the 2. Setting-up the 3. Preparing for
MVNO model business launch
Negotiations Branding
Regulation
with MNOs
Market & Value
Agreement
competition proposition
with host MNO
review
Selection of Sales &
Gap analysis the enabling distribution
platform strategy
Preparation of Marketing
Positioning
business plan
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21. The selection of the model is driven by the market opportunity and
the positioning of the MVNO
ILLUSTRATIVE
MARKET/GAP ANALYSIS POSITIONING MVNO MODEL
• Limited competition on price DISCOUNT
Simple, cheap
RETAIL
mobile services
• Significant retail-wholesale gap
• Competitive market Competitive offer ETHNIC
tailored to target BUSINESS
• (some) underserved segments segment YOUTH
• Poorly differentiated offer Innovative MEDIA
service & WEB
• Limited availability of VAS/data applications BANKING
• Mature telecoms sector Extend fixed
TELECOM
service offering
• Fixed-mobile convergence DATA
to mobile
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22. The selection of the MNO and the consequent agreement is a
fundamental step in the MVNO launch
 Identify MNO which fits better with the selected MVNO model
 Overall market positioning
 Target segment penetration
 Put first on the list candidate MNOs:
 With clear wholesale/MVNO strategy
 Seeing MVNO as a partner (not a competitor)
 Use “regulatory” threat in case of:
 Hostile approach by all/most MNOs
 Excessive wholesale rates
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23. The pricing model is the single most important element of the
wholesale agreement
Works well in
case of MNO
and MVNO
working well as
Commercial partners
Margin risk for Retail Minus Cost Plus Max flexibility
the MVNO as it for the MVNO
is dependent on to compete on
MNO’s moves cost and
differentiation
-
Retail Minus and Cost Plus are often imposed by Regulators
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24. Selection of the Enabling Platform: the role of MVNEs
 MVNOs owning the elements in the mobile value chain relating to
infrastructure and operations can either
 Develop these in-house
 Outsource them to a Mobile Virtual Network Enabler (MVNE)
 An MVNE is a company whose mission is to facilitate MVNOs market
their services, acting as:
 A “One-stop-shop”, providing the whole back-end enablement
(including the airtime)
 A provider of specific applications/services required by the MVNO
(e.g. service platform, billing, customer care, VAS, etc…)
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25. Preparing for launch
• Brand should reflect MVNO’s mission and positioning
Branding • Use existing strong brand (if available)
• Consider partnership with existing brand
• Should be tailored to target customers’ needs
Value proposition • Differentiated from other mobile players
• Commercial implications should be taken into account
Sales & • Coverage very important especially for prepaid
distribution • Consider partnership with host MNO (or other retailers)
strategy • Local regulations should be taken into account
• Define strategy for launch (brand awareness)
Marketing • Define ATL and BTL mix based on budget
• Consider innovative low-cost mechanisms
• Focus not only on acquisition but also on retention
Other • Exploit synergies with existing operations (if applicable)
• Maximize efficiency in all operations
25

26. Any questions? Please contact:
Dimitri Kallinis
Partner
dimitri.kallinis@svpadvisors.com
Company Address (main offices):
THANK YOU C/ Almagro 15, 5th floor
28010, Madrid
Spain
Telephone number:
+34 91 310 2895
Fax number:
+34 91 141 28 11
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