The Mobile Virtual Network Operator (MVNO) market is experiencing rapid growth globally, and Brazil is no exception. As telecom markets become increasingly competitive and complex, MVNOs provide a unique opportunity for businesses to offer wireless services without owning the necessary infrastructure.
This article explores the growth projections, business drivers, technological trends and the sectors benefiting from MVNOs. Additionally, it highlights how businesses can optimize revenue diversification through this model and explores the role of HCLTech in the space.
What is an MVNO?
An MVNO allows companies to provide wireless services without owning the underlying infrastructure. Instead of building their own network, MVNOs lease network infrastructure from established telecom operators, utilizing their radio access networks, core networks and software applications. This allows businesses, such as retailers, financial institutions and even sports clubs, to offer mobile services to their existing customer base.
As Anshul Verma, Senior Vice President and Head of Strategic Initiatives – TMT RCPG and LATAM at HCLTech, explains: “MVNO is a very interesting concept, which has been in use for a long time. From a business point of view, it allows businesses to utilize telecom assets that are idle and loan them out to businesses, enabling them to offer wireless services to their customers.”
Growth projections and drivers in Brazil vs globally
Globally, the MVNO market has been “growing faster than overall wireless telecom services” and is expected to continue to grow significantly, reaching $172.01 billion by 2032, up from $98 billion currently. Brazil’s MVNO market, which is valued at $1.76 billion, is projected to experience a growth rate of 7.64%, surpassing $3.76 billion in the same period.
Verma highlights the importance of the Brazilian market, noting: “Brazil is a very unique market. It has a population of 212 million people spread across a vast landmass. Providing telecom services to the entire population is a challenge.”
While global MVNO growth is fueled by similar factors such as increasing competition and technological advancements, the vast size of the country and its dispersed population creates logistical hurdles for telecom service providers, particularly in rural areas. “The government of Brazil has been promoting digital transformation, and they see MVNOs as a channel to reach underserved populations in rural and remote areas, including farmers and farm owners,” continues Verma.
Emphasizing another significant driver, he says: “Another business driver in Brazil is the extreme competition when it comes to providing services to existing sets of customers.”
He compares this to North America, where the market has become saturated: “In larger markets like North America, there are typically three or four players who capture the entire market, and then the market becomes saturated.”
This saturation, which limits growth opportunities, contrasts with Brazil’s situation, where competition remains high and businesses are looking for new models to differentiate themselves, such as MVNOs.
This regulatory support, coupled with Brazil’s drive to bridge the digital divide, sets it apart from many other markets, where MVNO growth is more driven by business competition and consumer demands for lower costs and better services.
Technology trends shaping the MVNO market
The rapid evolution of technology is playing a significant role in the growth of MVNOs. A major trend accelerating this market is the adoption of eSIM (embedded SIM) technology, which eliminates the need for physical SIM cards.
“Earlier, telecom providers had to physically distribute SIM cards. Now, with eSIM, virtual operators can easily offer services without any physical presence,” explains Verma.
The rollout of 5G networks has also opened new opportunities for MVNOs to offer a broader range of services, such as video streaming and edge computing applications.
“5G allows MVNOs to offer a variety of services, including video streaming, and a lot of edge computing applications that will become more easily available, including IoT applications,” he continues. These advancements enable MVNOs to provide more data-heavy and innovative services, catering to growing consumer and business demands.
Sectors benefiting from MVNO growth
The beauty of the MVNO market is that it cuts across different verticals. “You don't have to be a telecom expert. Your business can be from any sector — financial services, retail, sports clubs, religious organizations with large memberships and even utility and energy companies,” says Verma. The key prerequisite for launching an MVNO is having a large customer base that you want to monetize and cross-sell services to.
What makes MVNOs particularly appealing across such diverse industries is that the entire operating model can be outsourced.
“You can outsource the network from a telecom operator, and you can outsource business applications or operations stack from a system integrator like HCLTech or an MVNO,” says Verma. This allows businesses in non-telecom sectors to enter the telecom space without heavy infrastructure investment.
However, the success of an MVNO ultimately hinges on having a compelling value proposition.
“What you need to create as an enterprise or a business owner is a value proposition that is strong enough to convince customers to switch from their existing telecom provider to you,” he notes. This is the critical factor that will define the success of an MVNO project, as businesses need to offer something distinctive to gain customer loyalty.
Optimizing revenue diversification with MVNOs
In today's turbulent economic climate, many businesses are struggling to find new growth opportunities. MVNOs present an exciting chance to diversify revenue streams and monetize existing customer bases. As businesses look for ways to adapt, the MVNO model offers a viable solution to both expand their offerings and improve customer retention.
Many companies have already successfully capitalized on this opportunity. A prime example is one of the largest MVNOs in the world serving over 21 million customers, which is owned by a leading provider in enterprise and consumer telecom services that operates multiple MVNO sub-brands. This success demonstrates the scalability and potential of MVNOs when integrated effectively into a broader telecom strategy.
Another example of an MVNO that has thrived is one launched by the largest search and online advertising platform in the world. Available in multiple countries, this service has become a significant player in the market by providing seamless mobile services across different networks.
Similarly, a global provider of broadband internet services has successfully launched its own MVNO offering as a wireless cell phone service, tapping into new revenue streams and diversifying its business.
In Latin America, the launch of an MVNO by one of the largest digital banks has garnered significant attention, with the offering receiving a warm reception. These success stories illustrate how businesses in various sectors can leverage MVNOs to strengthen their customer relationships and create additional revenue streams.
However, despite the success stories, the MVNO market is not without its challenges.
“The failure rate in the MVNO market is high, and with two major factors contributing to this. First, is the lack of clarity on the value proposition,” says Verma. For an MVNO to succeed, the value proposition must be clearly defined, and businesses must know how to integrate it with their existing services. Without a compelling reason for customers to switch from their current telecom providers, the MVNO will struggle to gain traction.
“The second is the challenge of executing seamlessly,” continues Verma. Even with a strong value proposition, if execution falters, whether due to poor customer service or subpar network quality, customers will not remain loyal.
Successful MVNOs like TracFone, Google Fi and Comcast have mastered the art of both crafting a clear and compelling value proposition and executing their services flawlessly.
HCLTech's role in the MVNO market
HCLTech plays a pivotal role in the MVNO ecosystem, leveraging its deep expertise in telecom infrastructure and business applications.
“We are in a unique position to offer MVNO solutions because of our heritage in product and platform engineering. We have extensive knowledge of telecom networks, including core networks, and the business applications — OSS/BSS/ Customer Service required to run telecom operations. This makes us a valuable partner for MVNOs looking to optimize their operations,” says Verma.
HCLTech also has expertise in CX and e-commerce transformation for telecom service providers, which is essential for increasing the probability of success for nascent MVNOs.
He continues: “In Brazil, we are partnering with consulting organizations that have a telecom consulting practice to help create the business case. We work with consulting organizations that bring expertise in creating business cases and value propositions for MVNOs. This combination of technical expertise and business consulting gives us a unique edge in the Brazilian market and beyond.”
Additionally, HCLTech’s extensive experience working across both enterprise and consumer telecom sectors, combined with its end-to-end capabilities in consulting and execution, enables the creation of tailored MVNO solutions that optimize operations and drive business success.
An opportunity
The MVNO market is poised for substantial growth, with technological advancements, regulatory support and the demand for differentiated services driving this expansion.
With Brazil’s unique focus on underserved regions and its government-backed push for digital inclusion creating distinct opportunities, the country is emerging as a key player.
For businesses, MVNOs provide an excellent opportunity to diversify revenue and deepen customer relationships, but success depends on a compelling value proposition and flawless execution. HCLTech, with its comprehensive knowledge of telecom networks and business applications, is well-positioned to support businesses looking to enter or optimize the MVNO space.
“We believe that MVNOs offer an exciting opportunity for businesses to create new revenue streams, and we are committed to helping our clients succeed in this growing market,” concludes Verma.
