MVNO malaise

Publié le par Jean Arnal

Recent news both from the US and the European markets confirm that being MVNO is not easy. Facts first: in the US, Amp'd Mobile filed for bankruptcy reorganization protection, after Mobile ESPN shut down last year, and Helio is struggling for survival, in Europe same story: Debitel France is seeking a buyer for months and now Ten Mobile is also for sale. What is at stake? The MVNO business model is not strong enough to provide profitability. Amp'd owes Verizon about $33m and is being threatened with a service shutdown by Verizon; more generally its debt amounts to $100m. Ten Mobile spent about $900 per subscriber in acquisition cost, but reached its ARPU goal with about $67 per month (average French ARPU is about $40). The error was to think that enough Frenchmen are willing to pay such a high amount. The problem seems similar for Amp'd targeting the youth segment, but having problems getting the kids to pay up. What will happen? Strong MNOs will take over ailing MVNOs. SFR (France) is bidding for Debitel France; Orange or Telecom Italia are bidding for Ten. Out of very specialized differentiation (niche markets, such as ethnic groups), the MVNO business model seems risky as MNOs are often very strong (deep pockets, handset subsidies, network operator, offering unlimited plans and bundled plans, ...) and leave few room for MVNO to exist.

Publié dans Top stories

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