Experts at the Wireless Technology Labs (WTL) have championed the course to chart the way for mobile virtual network operators (MVNOs) to operate sustainable and profitable business models in Nigeria.
Speaking at an MVNO conference organized by in Lagos, with the theme: “Profitable Paths: Charting the Future of MVNOs in Nigeria”, telecoms industry experts submitted that reliance of the MVNOs on voice and data alone as their sources of revenue cannot guarantee their profitability in the country’s challenged telecoms sector.
As the Labs provided opportunity links for the MVNOs to succeed in their business, it emphasized the need to avoid the pit fall that led to the exit of many internet service providers (ISPs) from the Nigerian market such as running untenable business models.
The MVNOs operate without owning a mobile spectrum license but leverage the infrastructure of licensed mobile operators to offer services under their brand names.
Meanwhile, the experts said the way out for MVNOs in Nigeria is to offer an array of Value-Added Services (VAS) that are not being offered currently by the Mobile Network Operators (MNOs).
According to them, many Nigerians are already subscribed to voice and data services from the MNOs and may not want to change to MVNOs for the same services.
The Nigerian Communications Commission (NCC) has so far licensed 43 companies as MVNOs and they are expected to start rolling out their services anytime soon.
The entrance of the MNVO, which will be riding on the existing infrastructure of MNOs, is expected to provide competitive offerings in the telecom market and lower the costs of calls and data for subscribers.
Speaking at the event, the Chief Executive Officer of WTL, Mr Satya Mekala, said MVNOs in other climes became profitable by offering VAS and not from data or voice services.
He noted that MVNOs have the advantage of offering services in several areas of the economy, including education, agriculture, and rural development, among others.
“What MVNOs do is that they look at a particular problem in a particular market, for instance, in education or agriculture or remote rural areas. They look at it as a business opportunity and provide solutions and they make money.
“Mobile operators are not doing that because they have become very big and very rich and making a lot of money. The MVNOs can only make a small amount of money from voice but they can make a lot of money from VAS,” he said.
He further highlighted MVNOs’ advantageous position in fostering innovation, particularly in education, agriculture, and rural development, underscoring the potential economic benefits for both the country and the MVNOs.
The WTL boss also advocated for government intervention to improve infrastructure in rural areas, thereby integrating underserved populations into the mainstream.
He suggested subsidies and favorable policies to incentivize investments from companies, ultimately facilitating connectivity for the unconnected populace.
Despite acknowledging the potential, Mekala also addressed challenges such as profitability, competitiveness, and sustainability stemming from limited pricing flexibility and constraints on technological innovation.
Corroborating Mekala, the Vice President, TecnoTree of Himmat Gill, said MVNOs can only survive through market differentiation.
“Market differentiation can serve as a potent strategy for MVNOs to overcome the challenges of low revenue and competition from the MNOs. By distinguishing themselves from competitors, MVNOs can attract and retain customers,” he said.
A Mobile Virtual Network Operator (MVNO) is a telecommunications product and service operator that leverage the infrastructure capacity of a fully-licensed mobile telecommunication service provider or mobile network operators (MNOs).
This means that the operators will not need investments in their infrastructure but leverage existing facilities across the country to provide services.
According to Fortune Business Insights, the global MVNO market size is projected to rise from $67.54 billion in 2020 to $123.40 billion in 2028, at a CAGR of 7.9% during the forecast period, 2021-2028.
As of June 2014, 943 MVNOs and 255 MNO sub-brands were active worldwide. This represents a total of almost 1,200 mobile service providers worldwide hosted by MNOs, up from 1,036 in 2012.
